Committees on Arms Export Controls - Minutes of EvidenceHC 419-II

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Oral Evidence

Taken before the Committees on Arms Export Controls

on Tuesday 7 February 2012

Members present:

Sir John Stanley (Chair)

Richard Burden

Katy Clark

Ann Clwyd

Mr Jeffrey M. Donaldson

Mike Gapes

John Glen

Ann McKechin

Bob Stewart

Mr Dave Watts

Chris White

Nadhim Zahawi


Examination of Witnesses

Witnesses: Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills and President of the Board of Trade, Tom Smith, Head of the Export Control Organisation, Department for Business, Innovation and Skills, and Chris Chew, Head of Policy, Export Control Organisation, gave evidence.

Q61 Chair: Secretary of State, may we welcome you to your first but, I hope, by no means last appearance before the Committees on Arms Export Controls? We have a significant number of issues that we want to raise with you in the course of your hour with us, so we will crack straight on with our questions. First, we want to deal with the issue of trade delegations and priority markets. I have to make the point that I did write to you, and you did reply that the final list of your priority markets would be with us before you gave evidence to us, but we have not yet received it, so we have to work on a provisional list.

Vince Cable: Yes, that is correct.

Q62 Chair: When will you be able to send us the final list?

Vince Cable: I am sorry, but I will have to ask officials what stage we have got to with that. It is in my private office, as I understand it, so it is imminent, and we will get it to you as soon as possible. I am sorry you have not already had it.

Chair: Thank you.

Q63 Mr Watts: Secretary of State, why is your Department targeting Iraq, Libya, Pakistan and Saudi Arabia as priority markets for arms exports, when, at the same time, the FO has listed them as countries of concern? Where is the joined-up government in that?

Vince Cable: Well, there is no absence of joined-up government. We work jointly with the Foreign Office on all of this. The vast majority of countries that we export arms and security equipment to are fully democratic; there is no question over human rights. In those countries where there is, and you listed some of them, we apply the controls selectively. If there is any question that they could be used for, say, human rights abuse, the licensing provision is there to operate, under advice from the post and from our colleagues in Government. So there is a fully joined-up approach; it is just that, in those countries, a selective approach is adopted.

Q64 Mr Watts: Would it not be wise to reduce the amount of arms flowing into countries that are regarded by the Foreign Office as being of concern? Is it not just adding fuel to the fire to encourage people to sell more arms to those countries?

Vince Cable: That was part of the reasoning behind the consolidated criteria. Like you, I was in Parliament in 2001 and 2002, when we debated this, and I led for my party on it at the time when we incorporated the consolidated criteria into British procedures. They set out grounds such as regional conflict and human rights, as well as sustainable development, which we should take into account in the licensing process. If, indeed, the supply of arms does contribute directly, or can be said to contribute, to repression in those countries or to fuelling regional conflict, we would use the licensing system to stop that.

Q65 Mr Watts: But does it not concern you that, before the Arab spring, we were out there trying to sell arms to countries that turned out to be quite volatile? Are you not increasing the risk that that will continue to be the case if there is not a more joined-up approach and if, where there is an element of concern, you do not treat it as a top priority in relation to sales and the export trade?

Vince Cable: The countries concerned were not volatile, as I recall it. One can have different views about what the Governments were like, but they were not volatile. In the case of Libya, the previous Government had built up a close relationship with it. One can question whether that was wise or not, but they did that, and it included some defence arrangements as part of the process of helping Gaddafi get away from weapons of mass destruction. Tunisia was a regime that was not democratic but was not unstable. In the report that the Foreign Secretary prepared and which he gave to the Department in October, we did go over the processes that led to the award of licences in those countries and their subsequent revocation. I think that the conclusion was very clear, and certainly one that I supported, which was that the processes were robust enough and we were able to act to revoke licences-I think 158 in the event-to prevent any flows of arms under them.

Your starting premise, which is that these countries were unstable, was not right. Indeed, the new process we have introduced today and which in the written ministerial statement-the suspension process-is designed to deal with the instability problem. If there is something happening that we do not fully understand and is worrying, the process can be suspended until we have greater clarity on it.

Q66 Katy Clark: British-made surveillance technology has been used both in Iran and Syria. The European Union has now prohibited the export of surveillance technology to Syria. The Foreign Secretary has promised a ban in relation to Iran. Can you talk us through where we are in terms of Iran and that prohibition, and whether it is in place yet?

Vince Cable: I cannot talk you through the data of it. We do not export arms to Iran. There is not a trade boycott of Iran, but we do not encourage trade in general to Iran. As you know, with the European Union strictures, there are quite severe controls on what we can trade with Iran. There are difficult issues of some dual-use cases. Quite difficult decisions are involved in the export control business, and we have tried to manage them as best we can. Certainly nothing that fuels weapons of mass destruction, armaments in Iran or repression would be allowed through the licensing process. A similar, tough approach in licensing applies in Syria, but I do not know whether the officials want to add to that.

Q67 Katy Clark: You say that no surveillance technology is being exported to Iran.

Tom Smith: Basically, when the whole issue of surveillance technology first arose, the priority was to act very fast in respect of Syria because that was where the EU was working on the sanctions. We would have now a list in place. It is not perfect. It was partly because of the speed at which we did it and partly because it was the usual process of getting 27 countries to agree it. We have decided that we will take this list forward. We will improve it. We will look to apply it possibly in an interim at the UK level in respect of Iran, but while pushing very strongly for this to be incorporated the next time the human rights element of the EU sanctions on Iran are worked on, which I am expecting to be over the next few months.

Vince Cable: Sorry, I did not hear the word "surveillance" in your question. I thought that it was a more general question. I know that Lord Alton has come up with some very helpful suggestions on that, and we are following them through. We certainly do not want equipment or software, which is the issue here, to go that could be used to support repression in either country.

Q68Chair: I want to come to three items where the Committees are really very disappointed with the length of time that the Government have taken to respond to our specific recommendations. These three items are our recommendations in relation to "brass plate" companies, our recommendation in our report published in April 2011 on pre-licence registration of arms brokers and, to us, the very important issue of extra territoriality. In their response to our report in command 8079, the Government replied to our recommendations on each of those three subjects, "We are giving careful consideration to the CAEC recommendations in the light of recent events and will revert later this year."

Subsequently, I received a further letter from the Foreign Secretary of 30 September in which he said in relation to each of these three subjects, "The Government (the Department of Business, Innovation and Skills) will update the Committees regarding developments on these issues before the Committees start taking further evidence." By a matter of hours, you have fulfilled the Foreign Secretary’s timetable. You sent me a letter last night, which covers those three items. I must put it to you that it is unacceptable that nine months after the Committees have made carefully considered, precise recommendations on these three subjects, just within a few hours of your coming in front of the Committees, we should have had your letter in response. We are not going to question you further on these items today, because the Committee needs time to consider what you said in your letter. We may well wish to put some questions to you before we produce our report, but I have to register with you that the length of time that the Government have taken to respond on these three important policy issues is unacceptable to these Committees.

Vince Cable: I can only apologise on behalf of the Department and the Government that you have been kept waiting so long. I accept that that is not good. I cannot remember the exact wording of the letter that was sent to you, but I think in relation to "brass plate" companies, a lot of the activity that is being undertaken involves confidential security issues. We have undertaken to provide the Committee with a confidential briefing on what is actually happening in that area-equally, in relation to some of the broking activities as well if that is helpful. I certainly apologise on behalf of the Government for the delays in response.

Chair: We are going to move on now to the important issue of torture end-use control.

Q69 Chris White: Secretary of State, we welcome the Government’s stance on pushing the EU to toughen up the rules on torture end-use control. What will you be doing to ensure the EU acts on your wishes in this area?

Vince Cable: We have got past the point of getting the principle accepted that there have to be tough end-use controls on torture equipment. The issue is now largely a technical one of definition and enforcement, and there have been a lot of discussions with the Commission about how we draw this to a conclusion. I don’t know whether you want to update us on what is happening.

Tom Smith: Of course. What we have been focusing on, really, over the past year, is getting very specific pieces of torture equipment added to the relevant EU regulation, because that is where the most pressing priorities have been. That is particularly in relation to drugs being supplied to the United States for executions, but I believe there were some other items in the update that was agreed just before Christmas on the basis of Commissioner Ashton’s proposal. We know that the Commission is going to be doing a broader review of the torture goods regulation. Chris, I think this year it is planning-

Chris Chew: In the first half of this year.

Tom Smith: Yes. On that point, we know that the question of a horizontal end-use control is going to be on the table, and we look forward to pursuing that then.

Q70 Chris White: While this review is ongoing, will the UK take unilateral action to introduce controls?

Tom Smith: That is quite a difficult one. We do not have national end-use controls at the moment. The precedents that we have on weapons of mass destruction and on the use of military items in embargoed destinations both operate at EU level. There are difficult legal questions about doing this kind of thing at national level. There are also difficult practical questions, if we were to take action just by ourselves, because of the ease of circumvention. As I said, our strong preference would be to push the European Commission into having a full debate on this within the European Union. There are good signs that after perhaps being a bit slow over the past year, it is moving on this whole range of issues now over the next couple of months.

Q71 Chris White: Would you say we are taking the lead on this?

Tom Smith: On execution drugs? Absolutely, we did.

Vince Cable: May I add to that? When I was first approached by Mr Stafford Smith, who was the solicitor for one of the potential execution victims in the United States, we looked at how we could possibly help with this problem. He alleged that certain chemicals in the UK could potentially be used, and we used whatever powers we could to act on it. One of the positive developments over the past few months is that I think five of the potential execution drugs have now been accepted by the European Commission to be subject to export control in order to cut off any possible abuse.

Q72 Chris White: Thank you. To extend that particular topic on the banning of chemicals, particularly sodium thiopental to the United States, will this ban be extended past the date that it ceases to have effect, on 13 April 2012, and will it be extended to other countries?

Vince Cable: In principle, yes. There was a specific purpose for introducing the ban-it was not a temporary gesture. If there is a genuine threat of abuse in this case, we would of course extend it.

Chris Chew: The control on sodium thiopental now applies to exports from the EU to all destinations, because it has been adopted into EU regulation. The control is already worldwide on that particular drug, and on sodium pentobarbital.

Vince Cable: And it is not time-limited.

Chris Chew: And it is not time-limited.

Q73 Chris White: So the framework is there for that drug. Would it be widened out to other similar chemicals, which could be used in similar cases?

Chris Chew: If there is evidence that those drugs are likely to be used in execution by lethal injection, we will consider that case by case.

Tom Smith: The EU regulation has a list of what it calls fast-acting barbiturates-in other words, dealing with the problem that the American states might just start using a different anaesthetic. What we will do, as we have been doing over the past year, is to work quite closely with Reprieve, which has excellent sources of intelligence about what is going on, both in the US and elsewhere, so we can identify the threats and take action before it is too late.

Q74 Chair: Secretary of State, could you just clarify the evidence we have just taken there? Are your officials and you saying to us that the existence of the EU regulation will make it superfluous, or not, for the UK to consider extending your regulation that brings controls to the thiopental?

Tom Smith: On the thiopental and the pentobarbital, yes that is correct.

Chris Chew: On the sodium thiopental and the sodium pentobarbital, yes.

Q75 Ann Clwyd: The EU has been dragging its feet for a very long time, hasn’t it? In 2008, the previous Government were talking to the EU about doing exactly the same thing. Why has it taken all this time? What makes you think that they will suddenly speed up?

Vince Cable: All I can say is that when it came to my attention, and to Government attention here, through the lawyers representing the execution victims, we acted immediately, using the powers that we had in the UK. We have now had agreement at European level to adopt those export controls, so I have no complaint about the speed with which the European Union has acted in this case.

Q76 Ann Clwyd: You mentioned Reprieve. I am told that all our embassies, in every country, have human rights experts within them, but we cannot quantify the numbers. We can quantify the numbers of arms attachés in the various countries, and their ranks, but we cannot find out how many human rights experts there are. Why are you depending on Reprieve for your information when, surely, there should be someone based at the embassy in Washington who could also be following up these issues?

Vince Cable: We will certainly check how far the British embassy and consulates in the States have been involved in this, but my recollection is that we dealt with the legal representatives of the individuals involved.

Tom Smith: It is a team effort. There are things that we are better placed to find out, and there are other things occasionally. Reprieve has a particular angle, which is the dogged pursuit of individual state authorities under US freedom of information law. We work together well.

Chair: Secretary of State, we will now turn to the Export Control Organisation, and Nadhim Zahawi will ask you about your policy on the charging issue.

Q77 Nadhim Zahawi: The issue of charging for the processing of arms’ export licences has been raised recently. You told us in your response last year-in last year’s report-that you expected to hold a full consultation later on "this year", i.e. in 2011. Has that consultation taken place? If not, when is it due to start?

Vince Cable: We are not proceeding with this. We have decided not to introduce charging for the foreseeable future. The decision has been made, so the whole consultation process is not necessary. We may return to it, but for the foreseeable future we are not introducing charging.

Q78 Nadhim Zahawi: So the consultation is not happening.

Vince Cable: No, we had lots of informal consultation. I certainly discussed this with the leading business groups, among others, and they made their views very clear. As I say, we are not proceeding with charging for the foreseeable future.

Q79 Chair: Secretary of State, that is a very interesting policy announcement that you have just given us.

Vince Cable: I thought it was well known already.

Q80 Chair: Members of the Committee have expressed some concerns about going down that route. It would be helpful to us to know what it was that made you decide against introducing charging for the use of the ECO.

Vince Cable: There are pros and cons. The advantage of it was that there is a lot of administrative cost associated with the process. The Department wants to maintain that at a high-quality level and the user fee seemed a sensible way of doing that. The reason against it, which has prevailed for the time being, is that it is an additional burden, particularly on small and medium-sized companies, and we wanted to avert that.

Chair: Thank you. That moves us very conveniently on to the issue of the resources available to ECO. Ann McKechin is going to lead on that.

Q81 Ann McKechin: According to the information published in the recent annual reports of ECO, the average response time for processing licences is increasing, but what is also increasing is the actual number of cases that have been finalised. What steps are you taking to reverse the trend and to deal with the additional number of licences that you are processing?

Vince Cable: I will ask the head of ECO to deal with that, but my understanding is that, although there are some major cases where there has been an argument about delay, performance has been improving. Something of the order of two thirds of all cases are cleared within the 20 days.

Q82 Ann McKechin: Well, 82% in 2006 were finalised within 20 working days, and it is now only 63%. That suggests to me a substantial decline in standards.

Vince Cable: Perhaps you can explain, Tom. Although it is not ideal and we do not claim that it is ideal, I thought there had been some improvement.

Tom Smith: You are absolutely right in terms of the past trend. Basically, what we have had over the past few years is a steady increase in the volume of export licences and, yes, performance has suffered. The good news, compared with the news I was able to give the Committee last year, is that we have started turning this around. In 2010, we actually did 63.9% of licences in 20 working days. In 2011, we did 65.4%. The median processing time for a licence last year was 15 working days, as opposed to-this gets very mathematical, but I think it was 16 point something in 2010. That is partly because we have finally managed to stem this inexorable increase in individual licence applications. As I think you know, we got 9,600 in 2007. That went all the way up to 16,700 in 2010. Well, it was 15,700 in 2011 and we actually managed to succeed in what we have been trying to do for a little while, which was to allow exporters to do more business under open licences. That is quite a positive trend. I am not 100% happy with our performance last year. I think we still measure very well against other export control authorities around the world in a variety of ways-I can go into some more of that if the Committee is interested-but we have various plans in train in terms of increased efficiency and increased customer focus. I am hopeful that the story that we deliver next year will be significantly better.

Q83 Ann McKechin: As you may be aware, when we took evidence from EGAD it was not quite so keen about the open entry licence and it was complaining about the degree of bureaucracy that very standard licence requests were having to comply with. It said that there was enormous scope for a review of the system, particularly an assessment of the risk factor that you put on applications and, accordingly, what level of criteria that you set to applicants to meet before their licence was granted. I just wondered whether you had any plans, as part of your bid to enhance your record this year, to carry out a more strategic review.

Tom Smith: There are two things we are doing, really. We are looking at the scope for increased coverage of open licensing, which is one of the things that EGAD was talking about. In fact, we have one ready to go very soon. It is very technical, in the nature of these things, but what it does is to add to the scope of open licensing some technology which has been de-controlled by the international regimes, but where EU law has not quite caught up. For example, that relates to issues such as components for standard cryptographic technology, like the components for a wireless router, which for some reason in the past have required an individual export licence. We are hoping that by things like that we can take hundreds of export licence applications out of the system annually. The reason why we have sometimes had to tread carefully really touches on the questioning at the beginning of this session, because we have to make sure that we apply exactly the right level of risk assessment to each one. There is constantly a balance between a quick answer for business and making sure that we do not cut corners.

Chair: In a moment, we will come to the wider issue of the Government’s arms exports policy review, but before we get there we want to turn to the military end-use control issue.

Q84 Richard Burden: There have been––and the last Government voiced––some concerns about the limits on the current controls in terms of what they did not cover, whether it be complete items that may not have been strategically controlled but could have been of significant use to embargoed destinations or any exports of those sort of things to non-controlled, non-embargoed destinations. In our last report, we expressed some concern that the work that was being done under the previous Government may not be being continued. If we understood it correctly, the answer that came back was that the EU is now looking at this, that it has published a green paper and that we are looking at that to solve it. The question really is: where are the responses to the green paper up to? What are we seeking from that, and when would you see the review being concluded?

Vince Cable: There is a commitment to end-use control, but perhaps you could give us the detail?

Tom Smith: Yes. You are absolutely right, Mr Burden, we do favour an expansion of the current military end-use control in the EU dual-use regulation. We have an opportunity now that has not really been there for the past couple of years, which is that the Commission is effectively reviewing the whole framework of the dual-use regulation, following the publication of its green paper. The formal UK response to the green paper has been published and it includes, as a formal UK proposal, an expansion of the military end-use control. Again, this is being taken forward in broader discussions on the dual-use regulation over the next few months. It is fair to say that nothing works at light-speed in Brussels, but we are hopeful that there is now movement where there was not previously movement.

Q85 Richard Burden: Just so that we can be clear for the record, can you let us know what the changes are that we are seeking?

Tom Smith: Perhaps I could ask Mr Chew on this point?

Chris Chew: We have proposed that the military end-use control would apply to complete items going to embargoed destinations and also to complete items that are to be modified into military items, neither of which are covered by the current end-use control. That is the proposal that we have made to the Commission.

Q86 Richard Burden: What about control of exports to non-embargoed destinations?

Chris Chew: The proposal we have made applies only to embargoed destinations.

Richard Burden: Because that second area is something where concern has been raised. Why are we not making any-

Chris Chew: The control would apply if the items are going to a non-embargoed destination for ultimate delivery to an embargoed destination. The concern would be that if we applied it to all destinations, it would potentially be very broad and would catch a whole range of activity that we are not particularly concerned about.

Tom Smith: The concern from my perspective is that end-use controls are essential-they are an essential club in our bag-but they have their shortcomings. They are not particularly transparent for business and they are not easy to enforce. They can be difficult to understand, and if you try to make them do too much, you can run into problems with enforcement. I think that where there is consensus for action in the EU, it is very much in respect of exports to embargoed destinations. I think we would struggle to get acceptance for a much wider range of countries with, more generally, human rights concerns.

Q87 Richard Burden: So, what you are saying, and this might be relevant to some of the later questions, is that in terms of there being any effective end-use control on components for possible chemical, biological and nuclear weapons-that is what we are dealing with-if a place was not on an embargoed list, even if we felt that-

Tom Smith: I am sorry to interrupt you. I look at Mr Chew for correction here, but there is separate end-use control in the EU dual-use goods regulation that relates to items of use in weapons of mass destruction. So that is not limited to embargoed destinations.

Q88 Chair: Lord Alton has made representations to the Committee that the Government business managers are blocking House of Commons consideration of his Re-export Controls Bill. Are the Government seeking to block House of Commons consideration of that Bill, and if so, why, Secretary of State?

Vince Cable: I hope not, but I simply do not know. I will consult the Government managers in the other place, where this is an issue, but I do not know the answer to the question. I hope that that isn’t the case. I referred to Lord Alton earlier. He is clearly making a very helpful contribution to this whole debate.

Chair: Thank you. We will now move on the UK-US defence trade co-operation treaty.

Q89 Mike Gapes: Secretary of State, as you are aware, the initial signing of this arrangement was by Tony Blair and George Bush in 2007. The US Senate took three years to bring in the necessary legislation, but it did so with conditions, which have caused some concern. We have had evidence recently from the Export Group for Aerospace and Defence, which says that there are concerns, both in the UK industry and in the US about what is going to happen with this defence co-operation treaty in practice, and there is dissatisfaction on both sides about how it is going to be implemented. What is your assessment of where we are at the moment, and what can we do to make sure that UK companies benefit from this and that the US does not, in effect, carry on creating restrictions for our companies exporting to the US market?

Vince Cable: We did regard the agreement as positive for the UK, and my understanding is that what is happening at the moment is that the MOD is having a whole series of seminars with British companies, in order to make sure that they understand the significance of the treaty and that it works for them. There is a lot of detailed work going on with UK firms.

Tom Smith: Essentially, the MOD is running a series of pathfinder projects to help those UK companies that are most likely to be interested. I think it is fair to say that what we are finding is that the specialist arrangements in the bilateral defence trade treaty are better suited to companies in some areas than in others, and in parallel we are working closely with the US Government on President Obama’s broader export control reforms, which would involve moving some products out of the scope of the international trade in arms regulations into the more sympathetic Department of Commerce scrutiny. So, with a combination of all these measures, we are looking to get a better working arrangement together between the UK and the US systems.

Q90 Mike Gapes: When will the new treaty start to have an impact? We were told that it would be early 2012. How early is that going to be?

Chris Chew: The current date for bringing the treaty into force is the end of March 2012-so, within a couple of months.

Q91 Mike Gapes: At the same time, Mr Smith has just referred to this other US export control amendment. Concerns are also being expressed about whether that will have a negative impact, and there has been a call from the industries in this country for a pause in the implementation, so that our Government can have a dialogue with the Americans. Is that likely to happen? Are the Americans likely to listen?

Tom Smith: We very much hope so, because we had good results working with them on a previous measure about the treatment of third-country nationals in US law. To be fair, business groups were specifically calling for a pause on one specific item: a proposal by the Department of State to change the definition of brokering under the ITAR. There is quite a lot of support in principle among UK companies for the broader reform of the US military list––the fact that some very non-sensitive project products are currently on the US military list and therefore subject to the full rigours of the ITAR. That is something we all on both sides of the Atlantic support.

Q92 Mike Gapes: Is there a formal UK Government response to the Americans’ proposals? I understand that the comment has to be made by next month or next week.

Tom Smith: Yes, that is something that we have already been speaking about to the State Department. I say "we", that is the MOD with the Washington embassy.

Q93 Mike Gapes: So the MOD is the lead Department on this?

Tom Smith: Yes, they are.

Chair: We come now to the DSEi trade exhibition issues.

Q94 Ann Clwyd: I have been to some of these exhibitions and identified things that should never have been there. I notice that Caroline Lucas this year found that two Pakistani companies-Pakistan Ordnance Factories and Pakistan’s Defence Export Promotion Organisation-had both displayed promotional literature for cluster bombs. Similar concerns about both producers have been raised at past exhibitions. UKWG raised with the Committees in its submission to last year’s inquiry that these organisations had advertised cluster bombs at DSEi in 2009 and were under investigation. I find it incredible, if they have transgressed in the past, that they should come back and exhibit such things again-promotional literature for cluster bombs-when we clearly have a strong view about the use of those munitions. Surely it is not up to NGOs and individual MPs to find out these things. They have also found, for example, restraint items such as leg irons and belly chains. Why does the DSEi’s compliance unit not spot these things? Why is it left to others?

Vince Cable: If offences are being committed, it is up to our authorities to ensure that we jump on them quickly and take action. I have not been to the exhibition, so I am just going by second-hand reports. My understanding is that Caroline Lucas and others had identified material that was highly offensive but that was not illegal to advertise. I may be wrong, but that was my understanding. What the Government authorities have done in the case of this privately run exhibition is to say to the organisers that this is not acceptable and should be withdrawn. There is a lot of close observation of what happens at that exhibition. It is not run by the Government and we cannot therefore directly control what it displays. There is a lot of stuff-not just in the arms field-that is very offensive but not illegal. It is a question of bringing pressure to bear on the organisers. This is my first year of exposure to this problem; I will try to ensure that we pay it close attention next time there is an exhibition.

Q95 Ann Clwyd: I am very interested that an MP got in there in the first place. In the long time past, I have tried to get in and been refused admission. I wonder why no prosecutions have taken place if they are selling stuff that is illegal. Why have no prosecutions taken place?

Vince Cable: I will ask the officials to answer that. As the exhibition is privately organised, admission is not something we control. Clearly, if there are offences, we must act on it. I will ask what the state of play is.

Tom Smith: First, specifically on DSEi 2011, I know that the relevant authorities are looking in the usual way to see whether offences have been committed and, if so, what should be done about them. You will understand that I had better not say more about particular cases. I also understand, as the Secretary of State alluded to, that it is not necessarily a criminal offence to display a brochure, even if it is clearly for something that we would never give an export licence to. That is the distinction. There is no way that we would ever issue an export licence for leg irons, cluster munitions or stuff like that from the UK. When we see this stuff being advertised-sometimes we catch it first, because we patrol DSEi quite closely-we put a stop to it, but that is really where it has got to.

Q96 Ann Clwyd: But this fair took place in September; it is now February. What has been happening in the meantime?

Tom Smith: I am really sorry, but I cannot go into detail about what may or may not be happening on individual bits of enforcement action. It is complicated by the fact that displaying a brochure is not always of itself illegal.

Q97 Ann Clwyd: If it is a brochure selling torture equipment, which we would not give an export licence to, that’s fine, is it?

Tom Smith: It is not fine, and that is why we shut the stands down the moment we see them.

Chris Chew: But it is not necessarily illegal.

Tom Smith: It is not necessarily a criminal offence to display the brochure.

Q98 Ann Clwyd: This last year, no stands were shut down, were they?

Tom Smith: Yes, they were. If you were interested in the detail, I would want to take that away and write to the Committee. I understand that two stands were shut down this year and a similar number were shut down in 2009. There always seems to be the odd exhibitor who does not quite get the message, but, as I said, it is a separate question whether those exhibitors actually committed criminal offences, because they may not have.

Q99 Ann Clwyd: If you will write, because we will be returning to this, I am sure.

Vince Cable: Yes, indeed.

Q100 Chair: We would like to take up the offer that has been made to write to us in more detail, please.

Vince Cable: Yes, and I can understand. I would have reacted in the same way had I been aware that that was being displayed.

Chair: If we could have that written addition pretty soon, because we are drafting our report. Thank you.

Tom Smith: indicated assent.

Q101 Mr Watts: Do I take it that someone can advertise products that would be illegal for an export licence and then supply them from a third nation? I cannot see a reason why anyone would have a brochure with such equipment in unless it was telling the potential customers that they could purchase it from that company.

Tom Smith: I guess that must be right. If people bring literature to a fair, it is because they are selling it. That is why we shut that down as soon as we catch it. It does get into this very technical question: is just displaying the brochure caught by export control or by brokering law?

Q102 Ann McKechin: If there is such a loophole in the law, would the Government be minded to change it so that the loophole is closed?

Vince Cable: If there is a loophole in the law that is very clear and can be dealt with, certainly in principle, I would be up for changing it. There would be legislative issues, but that is a perfectly fair question, and that would be the right response.

Chair: Secretary of State, we want to come to the important issue of the outcome of the Government’s review of arms export controls and policy. We will return to this in a few minutes, when the Foreign Secretary comes before us, from the standpoint of the FCO’s responsibilities. Of course, we will focus our questions to you in relation to your responsibilities.

Q103 Mr Donaldson: Secretary of State, what contribution did your Department make to the export policy review that was led by FCO? Did you feel that this was sufficient?

Vince Cable: Yes. It was a fully integrated operation-we shared the process and concurred with the outcome. There was no division between the two Departments.

Q104 Mr Donaldson: What are the implications of the review on the Export Control Organisation and the future issuing of licences, especially to countries that have issues about human rights?

Vince Cable: We drew two forward-looking conclusions, both of which are reflected in the written ministerial statement I made today. The first was that where you have an unstable situation, where it is not clear where the politics is heading, we need something more effective than revoking licences or not. That is why the suspension mechanism has been introduced.

The second lesson we learned from this, in terms of how BIS applies the export control system, is that there clearly is an appetite for more information and for transparency, and I think that is absolutely right. We have indicated that there are a variety of practical ways in which we can try and meet that-by insisting that applicants for licences give more information about the equipment, or whatever it is, how it is going to be used and where-and that there is more information that we think can be released without the abuse of commercial confidentiality, and we will try to do what we can to do that. We want to consult the NGOs and industry about how much we can get out, and we want an independent assessor/auditor looking at the process that we operate in our Department. All those things do not necessarily affect policy, but they would improve the process and we think that is one of the positive conclusions we got out of this review.

Q105 Chair: Secretary of State, you say in your written statement today, in relation to the Foreign Secretary’s announcement on 13 October last year on the outcome of the review: "It concluded that there were no fundamental flaws with the UK strategic export licensing system. We share this view." I have to say I am surprised that you said that. I think whether there were fundamental flaws in the system is open to question, but surely it cannot be in doubt that there were fundamental flaws over the judgments used in the system, because unless there were no fundamental flaws in the judgments, you would not have had to revoke 158 extant arms export licences. Do you agree that there were fundamental flaws in the judgments?

Vince Cable: No, I do not agree with that, because if I were to, I would effectively be saying that the absence of perfect foresight is something for which we have to apologise, and I do not think we can. The best judgments were made in the circumstances of the time and with the information that was available. We do not have perfect foresight. It is clear that the situation changed in ways that were not expected by any observers of the scene, but the system responded effectively and the revocation of licences took place. What we have accepted is that, where you have conditions of uncertainty, we need a speedier and more flexible mechanism, and that is what we are now introducing.

Q106 Chair: If you do not accept that there were fundamental flaws in the judgments, would you accept that the decisions and judgments taken at the time-and we have tracked those since the beginning of 2009-were based on a seriously over-optimistic, rose-tinted view of authoritarian police state regimes?

Vince Cable: I do not think they were based on an over-optimistic interpretation of what was happening. In relation to authoritarian regimes, I stated our position at the very beginning. We do do trade and we do do trade in armaments with Governments that are not democratic and have a bad human rights record. We use the licensing regime to very carefully distinguish between different uses. We would stop any armaments going to reinforce the repression of human rights, so that the licensing regime is used selectively with oppressive Governments, but we do business with oppressive Governments and there is no denying that.

Q107 Chair: May I turn finally to the issues of intra-community transfers within the EU? Are you disappointed at the rate of implementation of the EU directive in this area, or are you satisfied with it?

Vince Cable: Maybe officials can help with that again.

Tom Smith: Chairman, we and others in Europe are well on course to implement the intra-community transfer directive by the deadline in June. In an ideal world, we would have hit the interim deadline of transposition, which was last year, but it is very important that we get this right. The reason I am confident is that the directive is very largely modelled on UK practice. As such, it will not require major changes to UK export controls. But there are a couple of issues in there, such as the regulation of technical assistance, on which we want to consult very carefully with industry to be sure that we are not unwittingly creating unnecessary burdens.

Chair: Secretary of State, our thanks to you and to Mr Smith and Mr Chew for the evidence you have given to us today. We shall want to pursue a number of items further with you by correspondence before we produce our report. Thank you very much indeed.

Vince Cable: Thank you, and I apologise again for the slow replies to your letter. We will try to ensure that that improves in the future.

Chair: The Committee is adjourned until such time as the Foreign Secretary appears. He is due to start giving evidence at 6 o’clock, but if he appears before that, we shall commence straight away.

Examination of Witnesses

Witnesses: Rt Hon William Hague MP, Secretary of State for Foreign and Commonwealth Affairs, Sarah MacIntosh, Director of Defence and International Security, Foreign and Commonwealth Office, and David Hall, Deputy Head, Counter-Proliferation Department, Foreign and Commonwealth Office, gave evidence.

Q108 Chair: Foreign Secretary, may we welcome you to your first appearance in front of the Committees on Arms Export Controls? May we also welcome Miss Sarah MacIntosh and Mr David Hall?

Foreign Secretary, we have received a substantial body of letters from you in the last 24 hours, some of which arrived only this morning. That places the Committees in a difficult position, and I must register the fact that that is not an acceptable performance as far as the Committees are concerned. We need time to consider the responses that you send to us. I have to highlight particularly one item that is still outstanding. As you are aware, there are unresolved discussions with your Department on the proposal, which I put to you, as to how we deal with the declassification of answers that you give to the important questions that we put to you on the basis of the quarterly information provided by the Government on arms export licence approvals and refusals.

You said in your letter to me of yesterday: "I hope shortly to be able to send you a substantive response to your letter of 24 October." This has been outstanding for months. This is time-critical as far as the Committees are concerned. I trust we will be receiving your response in the next few days. I hope it will meet the proposal that I have put to you. If necessary, I may need to request a meeting with you on this if we cannot resolve it in correspondence.

Mr Hague: On those points, Mr Chairman, we sent you quite a lot last night. One of those letters is in lieu of an opening statement, of course. If you prefer, I can make an opening statement. The three things that I attached were responses to quite recent letters, which we responded to more quickly in order to get them before the Committees met. On the other matter, of course we are looking very hard at what you raised on 24 October. That requires further consideration across the Government, but we will get a reply to you as soon as we can.

Q109 Chair: I do recognise that some of the items you sent yesterday are relatively recent requests, but also, as I pointed out to the Business Secretary, who has just been in front of us, in relation to three items on which we made specific recommendations in our report nine months ago on the issue of pre-licence registration of arms brokers, on brass plate companies and extra-territoriality, although you wrote to me promising a reply on that by the end of last year, we received no such reply until the early hours of this morning, when it came from the Business Secretary. I must put that on the record to you.

Secretary of State, I want to start with what is a major policy issue, if not the major policy issue for our Committees, which is whether there has been a change in Government policy on the approval of arms export licences for arms and ammunition and military equipment that could be used for internal repression. We took a deliberate decision in our report of last April to publish in full, as annex 1, the written answer that was given by the then Minister of State in the Foreign Office, Peter Hain, on 26 October 2000 in which he set out in full the consolidated criteria for arms exports.

As far as arms exports that involve weapons that could be used for internal repression are concerned, your junior Minister, Alistair Burt, in his press release statement on 18 February last year, entirely accurately and correctly summarised the previous Government’s position carried forward by the present Government on policy in this area. He summarised that accurately in these words: "The longstanding British position is clear. We will not issue licences where we judge there is a clear risk the proposed export might provoke or prolong regional or internal conflicts, or which might be used to facilitate internal repression." Foreign Secretary, has that policy changed, or is it as correctly stated by Mr Alistair Burt?

Mr Hague: That is still the policy. The "or", as you have pointed out on other occasions, is important.

Chair: It is profoundly important, Foreign Secretary, and I am glad that you have acknowledged that. That enables us to move on to the next important policy issue, which is the outcome of your export policy review into exports to North Africa and the Middle East.

Q110 Richard Burden: Secretary of State, I am a little confused as to exactly what this review has revealed. What has the review done to ensure that arms are not licensed to authoritarian regimes or regimes that may contribute to internal repression? What has it done to ensure that the kind of revocations that we saw last year do not happen again?

Mr Hague: It has done quite a lot of things. It made a few proposals of which you are familiar from my written statement in October, which have now been implemented. One of them, which the Business Secretary may have talked about, is the new licensing suspension mechanism. There is also increased oversight by Ministers, which is quite a substantial increase. In 2009, there were 24 applications overseen by Ministers-24 submissions. In the last year, there will be 153. That is a sixfold increase in ministerial oversight of applications in 2011 compared with 2009.

On top of that, it has led us to put new requirements on Foreign Office posts of more end-use monitoring, export licensing, specific training for desk officers, new security and justice assistance guidance to provide a more accurate picture of human rights situations in high-risk countries and more systemic use of many sources of information, including from NGOs and other organisations, to assess those situations.

All of that has changed, but your question begs another question, because you are saying to avoid revocations on the same scale. Of course we are all concerned when we see a large number of revocations, which is why we had the review. It does not of itself mean that the system is wrong, because when circumstances change, there can be revocations. I believe that these are important changes in procedures, but it does not mean that there will never be a revocation again; we cannot know that.

Q111 Richard Burden: I can understand that. I guess we could go round in circles on whether or not the system is flawed. In a sense, as the correspondence from the Chairs in recent times indicates, what we have been pursuing a little bit is whether or not the judgments that are built into the system are robustly founded. If what you are saying is that there will be more substantial checks done earlier to make sure that we are not constantly shutting the stable door after the horse has bolted, I should like to get a bit more of a sense about where that would make a difference. Let me give you an example. On 18 July last year, if I understand correctly, you said that there was no evidence that any of the exports to some of the countries that we have been talking about had been misused. Now are you saying that that was your best knowledge at the time, but that if the situation were to arise again, you would expect more checks to be done, so you are not so confident about that statement now. Or are you still saying that there was no evidence, and there is still no evidence, that there was misuse?

The reason I ask that question is that a couple of years earlier, in 2009, after the Gaza conflict, the former Foreign Secretary authorised quite a substantial check on exports that had gone to Israel, and he had concluded that, quite possibly, even though the licences had been given in good faith, British-made or British-supplied equipment had been used for purposes for which they should not have been used. Which is it? Are we saying that what you said last year was based on your knowledge at the time, and that we probably did not have enough knowledge, or are you saying that we did, in which case, how does the new system change it?

Mr Hague: Well, I called for the review-Alistair Burt and I both referred to the review, and we set the review going-before some of the later issues in the Arab spring. This was last February or March. There you are referring to my statement of 18 July, which I expanded on in a letter to the Chairman on 1 October to say that, while there is no evidence of the misuse of British-supplied arms and related items, you cannot actually prove that. You cannot really prove it either way. In the case of Libya, for instance, there was an uncorroborated report of the use of one piece of British riot control equipment, but after that report, our embassy in Tripoli closed and we were not able to confirm that any further.

There were other items sold to Libya that may have been used, but we cannot prove that. We do not have evidence of that, and of course we have to bear in mind that in Libya we destroyed munitions stores. We destroyed military units that were presenting any threat to the civilian population. A huge amount of their equipment was destroyed. We have not seen any hard evidence on that, but nevertheless, for all the reasons discussed by the Committees, it is common sense that when this situation arises you think, "Well, can we tighten this up? Has there been a failure in the system?" The review concluded that while there was no fundamental problem in the system, it could be improved; more decisions could be taken at a more senior level, and more work could go into identifying problems at an earlier stage.

I do not want to go on too long in answering this question, but there is a cautionary note to add to that: neither this country, nor the United States, nor Russia, nor the Libyans predicted what was going to happen in Libya. We will always have the problem that we will not be able to predict what happens several years down the road.

Q112 Richard Burden: Would you say that now the new, more cautious approach is in place, it is already being implemented in respect of, say, Saudi Arabia?

Mr Hague: The new procedures are implemented for the whole world. It is not a change of policy; it is a change of procedures in implementing a well established policy to apply the consolidated guidance effectively.

Q113 Mr Donaldson: Secretary of State, we have been told by both NGOs and the Export Group for Aerospace and Defence that they were not consulted during the arms export review. Why were they not consulted?

Mr Hague: This is an internal review. This is my Department giving me advice, which it does every day on a vast range of subjects. The officials are free to talk to whomever they want. They may wish to comment on it themselves, but it is an internal review within the Foreign Office, making recommendations to me. Sarah, do you want to expand on that?

Sarah MacIntosh: There was some consultation. The head of the Counter-Proliferation Department met with NGOs on 14 November last year, and with industry on 15 November. I think that you were there, Dave.

David Hall: Yes, I was at those meetings. There were informal consultations, giving information about how the review was going ahead. Prior to that, Jill Morris, the head of the CPD at the time, met a number of NGOs. We meet a number of these NGOs on a regular basis on export control issues. We are aware of and interested in their views on the system.

Sarah MacIntosh: We have further consultations to do, both with NGOs and industry, on the implementation of the system. One recommendation that is coming out of the review is to create a new department with responsibility for export controls. We are recruiting the head of that department, hopefully this month. As soon as that is done, there will be further consultations.

Q114 Mr Donaldson: Might that include EGAD as well?

Sarah MacIntosh: Absolutely, it would.

Q115 Mr Donaldson: Will you be publishing the results of the review?

Mr Hague: The results of the review are what I published in the written statement in October. That is the ministerial decision, although I accepted all the proposals of the review, so they are all there in the review. The rest of the review is an internal Foreign Office document; we do not normally publish those.

Q116 Mr Watts: Secretary of State, do you not find it strange that your Department has got Iraq, Libya, Pakistan and Saudi Arabia as areas in a list of concerns? You are concerned about those countries, yet BIS is targeting all those four countries as priority areas for the export of arms. Is there not a contradiction between what it is doing and what you are doing?

Mr Hague: Which ones did you mention? Iraq, Libya and Saudi Arabia?

Mr Watts: Iraq, Libya, Pakistan and Saudi Arabia.

Mr Hague: Let’s take a couple of those countries to illustrate the policy.

Q117 Mr Watts: Well, let’s take Iraq and Libya, because I do not think that anyone would think that they were stable regimes.

Mr Hague: Well, Libya is a new situation entirely; it is still subject to an arms embargo that we uphold and were instrumental in passing. The only things that we have provided to Libya that fall into these categories are body armour and de-mining equipment, which are exempt from the arms embargo. It is not inconsistent to promote a wider commercial relationship with Libya and to provide equipment of that kind. The relationship with Libya has changed three times over the past decade. The policy has changed three times, under the previous Government and under this Government. That is the position with Libya.

The position as regards Pakistan-sorry, you wanted to talk about Iraq. The position as regards Iraq-I will find the list of what we are currently exporting to Iraq-is that it is a country with a right to self-defence. It is a country with a great deal of internal political problems. All the exports have to be assessed under the consolidated criteria, but it does not mean that nothing should be exported to Iraq.

Q118 Mr Watts: I was not suggesting that it should not be doing some selling to them, but is it not strange for BIS to declare that those countries are priority areas for the sale of exports?

Mr Hague: No. Iraq has a booming energy industry for the future, with plans to raise its oil production to between 3 million and 4 million barrels a day. It is very important that oil companies such as BP and Shell are involved in a country like that. Of course, for any country that wants to raise its prosperity and export and have profitable investments in the rest of the world, such opportunities cannot be neglected.

There is the case of Saudi Arabia, which is a classic case that is often raised. In the Foreign Office, we say clearly that we have human rights concerns over women’s rights, the rights of foreign labourers and so on in Saudi Arabia, but the vast majority of British defence exports to Saudi Arabia-by value, probably 99%-relate to the provision of Typhoon aircraft and the updating of Tornado aircraft. Those are not relevant to our concerns about those rights. That is why it is possible to be on a list of countries of concern and for there to be a strong trading relationship with that country.

Q119 Chair: Foreign Secretary, may I come back to your conclusions in the arms export policy review? Can you clarify for the Committees whether or not you considered the judgments that led to the granting of export licences-158 of which have had to be revoked-to be perfectly fair and reasonable at the time they were made? Is that your position?

Mr Hague: Yes.

Q120 Chair: And faced with the same position, would you make exactly the same judgments today?

Mr Hague: Yes. Hindsight is always a useful thing. To put this in perspective, these are 158 licences among, annually, about 17,000 licences that are considered. That is the proportion that we are talking about. When you look back at them in more detail, you will see that some of them-I think about a sixth of them-were for exhibition or demonstration purposes. The majority of the equipment concerned was for communication purposes of one sort or another, and some of it was in conjunction with security sector training, including human rights training. There was, for instance-this was started under the previous Government-a police training programme with the Libyan police, and crowd control equipment was exported to Libya as part of that training programme and not handed over until the training was complete. In the context of the policy that the previous Government began, rightly, to turn Libya away from weapons of mass destruction programmes, and to re-engage with Libya in the western world, that sort of relationship was a correct judgment at the time.

Q121 Chair: So you do not believe, Foreign Secretary, that one of the lessons to be learned is that the revocations that have been made, which are of an unprecedented number in this particular context, call for an altogether less rosy-tinted and less over-optimistic view of what are authoritarian, police-state regimes? There is abundant historical evidence from around the world that an authoritarian, police-state regime can, in certain circumstances, turn nasty-or, as we are seeing in Syria, very nasty indeed-but apparently that is not colouring your future policy.

Mr Hague: You are quite right that, while I am saying that we should put the 158 out of 17,000 in perspective, it is also an unprecedented number. One can argue that from either direction. In the case of some countries, no licences have needed to be revoked. In the case of Syria and Yemen, I think it is no licences at all.

David Hall: Half those revocations were for Libya.

Mr Hague: Half the revocations were for Libya, where a different policy was in force from what was there before, or what we would recommend with hindsight to improve relationships with Libya. These were part of that policy. I think we have to understand and respect that that policy was engaged in by the previous Government from 2004. I do not think that shows that the whole policy is wrong in upholding the consolidated guidance. One could make an argument-I think, Mr Chairman, that you will perhaps come on to make it-that that guidance is not correct, and that there should be other criteria. On upholding the criteria about not provoking or prolonging internal conflict, internal repression or regional conflict, I believe it is a robust system, but it needed its procedures improved, and every effort needed to be made to try to forecast situations like this. I stress again that, as I have mentioned to the Committee a couple of times, we will not always succeed in forecasting that correctly.

Q122 Chair: Just one last question on this from me. You have focused, in the outcome of the review, very much on taking new powers, possibly quite expeditiously, to suspend licences that have already been granted, but is the key issue not that it will already be too late? As I said in the Westminster Hall debate, if you are suspending, then by definition the bullets have bolted, and we sell a great deal of ammunition. Should you not be focusing on the point when the initial judgment is made? In most cases, suspension will, by definition, be after the weapons and ammunition have left this country.

Mr Hague: There would be cases in a suspension when the goods had not been delivered and had not left. It is still open to us to revoke licences, rather than to suspend them. The idea here is, first of all, to provide a new tool of suspension, rather than continuing or revoking, so that when it is not clear what we should do, we can have a broader suspension at great speed, executed across all the relevant Departments. We can do that while we consider how to proceed. It is also a good means of signalling to exporters that conditions are deteriorating, and that the likelihood of securing licences is falling. It is a means of signalling to countries that their deteriorating conditions are starting to have an impact on their ability to procure goods, and it is also a means of signalling to other licensing countries that we are tightening controls.

The introduction of a rapid suspension mechanism is a good idea. It is not a substitute for revoking where necessary, or for making the right decision in the first place-of course it isn’t-but it may provide a useful additional tool when we face a difficult situation.

Q123 Mike Gapes: The letter you sent to the Chair yesterday includes a helpful annexe that lists a number of countries to which we seem to be still selling armaments. One of them is Yemen; another is Bahrain; and a third is Syria. That is how I read the letter. Given what has happened in Yemen, is it wise still to be exporting anything of a military nature to the regime there? Given what has happened in Bahrain, is it right that we continue to export anything there? As for Syria, there is a reference to military cargo vehicles in the annexe. May I have clarification? Are we exporting components or military cargo vehicles to Syria?

Mr Hague: No, definitely not. I am not sure what Mr Gapes is looking at there.

Mike Gapes: This is the letter that you sent on 6 February to the Chair, with an annexe.

Nadhim Zahawi: It says it is "for Libya and not for Syria".

Mike Gapes: That is what I am seeking clarification on. The way it is worded is ambiguous.

Mr Hague: Syria is subject to an EU arms embargo.

Mike Gapes: This relates to before the EU arms embargo, and it is to do with revocations.

Chair: Foreign Secretary, I picked up on this; you took the opportunity to correct an answer from Mark Prisk, who referred to Syria when he meant Libya.

Q124 Mike Gapes: In which case I withdraw my reference to Syria, but my point about Yemen and Bahrain remains.

Mr Hague: Looking at the figures for the second and third quarters of 2011 for these countries, in the case of Syria, since it is subject to an EU arms embargo, there were very few applications anyway. Sarah may wish to add to the point about Syria.

Sarah MacIntosh: I was going to talk about Yemen.

Mr Hague: There were never many applications with regard to Yemen. There were no such exports recorded in that period to Yemen. Any figures that may appear to you may relate to an earlier period of counter-terrorism training for security forces in Yemen, which would include the provision of some equipment. That training was completed. In the case of Bahrain through last year, the items that were exported include those for sporting use, telecoms, or training aircraft, but nothing that would fall within the criteria that we have just been discussing.

Q125 Mike Gapes: It would perhaps be helpful, subsequent to the letter that you sent to the Chairman, if you could send us further clarification to make it absolutely clear what the position is with regard to Yemen and Bahrain.

Mr Hague: Absolutely. It sounds as though further clarification is needed, so we will do that.

Chair: Perhaps we could have it fairly quickly, Foreign Secretary, because we are in the process of drafting our report.

I am going to move on to the issue of where licences have been revoked and where they have not.

Q126 Katy Clark: We have heard about the 158 revocations that were provided in a list to the Committee last year, and your letter today goes into more detail. Have there been any further revocations beyond the 158?

Mr Hague: No.

Q127 Katy Clark: So, for example, there have been no revocations to Saudi Arabia.

Mr Hague: No, there have been no revocations to Saudi Arabia.

Q128 Katy Clark: What do you say to people who say that there seems to be a great deal of inconsistency, particularly from a human rights approach, in relation to the approach to different countries? What is your response to that?

Mr Hague: Well, it is the response I gave to Mr Watts earlier. In a case like Saudi Arabia, we do not hide the fact that we have human rights concerns, nor do we hide that fact when we discuss general affairs and foreign affairs with the Saudis. We are applying here the consolidated criteria. As I mentioned earlier, the vast majority of the equipment sold to Saudi Arabia is in the aerospace area-Typhoon and Tornado aircraft-and that is not relevant to our concerns about women’s rights, and the rights of foreign labourers in Saudi Arabia.

It is important to remember that the applications allow us to make a decision on a case-by-case basis, so of course if an application fell foul of the criteria in any country with whom we have not revoked any licences, we would not grant it.

Q129 Katy Clark: What about other types of equipment that perhaps are more obviously used in internal repression? Have licences been allowed to proceed in relation to such equipment for Saudi Arabia?

Mr Hague: No is the general answer. We have not refused any licences, and key exports are components for vehicles, including some light armoured vehicles for the Saudi Arabian national guard, and Canadian light armoured vehicles. Perhaps 99% by value is for aerospace. Such vehicles have not been used for any purposes that would conflict with the guidance, either in Saudi Arabia or Bahrain, nor has there been any assessment that there is a clear risk of them being used in that way.

Q130 Katy Clark: In relation to Bahrain, obviously it is quoted on many occasions that British-made equipment was used, so what reassessment has there been in the light of that, and how has it affected your policy?

Mr Hague: We do not have any evidence that British equipment has been used in Bahrain, so there is no information that UK-supplied equipment has been used in breach of the criteria in Bahrain, but we revoked quite a lot of licences. We revoked 41 licences within a few days of the unrest beginning in Bahrain. Again, all exports are assessed on a case-by-case basis. A few moments ago, I mentioned the sort of things that would still be exported to Bahrain-sporting goods, training aircraft and things of that kind.

Q131 Katy Clark: But do you accept that UK-made armoured personnel carriers were sent to Bahrain?

Mr Hague: Were sent to Bahrain?

Q132 Katy Clark: That Saudi Arabia sent-

Mr Hague: Those are the Saudi ones I was talking about earlier. Yes, but the Saudi forces that went to Bahrain did not take part in any of the internal affairs of Bahrain. They were sent to guard installations under the Gulf Co-operation Council agreements. They did not encounter any unrest, and were not involved in dealing with any unrest in Bahrain. So, again, they in no way fell foul of our clearly established criteria.

Q133 Chair: Foreign Secretary, just on this subject, one of the questions that we put to you was to ask you to list all the extant arms export licenses to Saudi Arabia and you provided the Committees with that information and, indeed, we have made that public; it is a very extensive list. I quoted from your response in the Westminster Hall debate on 20 October and I quoted this particular group of arms export licences among the pages and pages of them that you helpfully listed for us, as follows: "assault rifles, blank ammunition, components for assault rifles, components for general purpose machine guns, components for machine pistols, components for pistols, components for rifles, components for semi-automatic pistols, components for submachine guns, general purpose machine guns, machine pistols, pistols, rifles, semi-automatic pistols, submachine guns, training small arms ammunition".

You, a few moments ago, agreed with the Alistair Burt statement on 18 February last year-that he was correct when he said in the second part of his answer that the Government "will not issue licenses…which might be used to facilitate internal repression." How, in such a country, with the serious known tensions between the Sunni majority there in control and the Shi’a minority, can you square that policy statement with that list of approved extant export licences which I have just read out?

Mr Hague: That is, of course, an important matter of judgment of what is the internal situation or could be the internal situation in Saudi Arabia. I think as the Amnesty International report said in December 2011, on the subject of demonstrations in Saudi Arabia, there were not enough details about these recent incidents to conclude whether the security forces used excessive force in response to violent acts-what appeared to be violent acts-on the part of some of the protesters. I do not think, on the basis of that, we can conclude that any of those items will be used for internal repression or internal conflict or regional conflict. One could have an argument about that, but we have not come to that conclusion.

Chair: Foreign Secretary, we are going to move on to an important recommendation which we made in our last report, in which we recommended that you should extend your review of arms export policy to authoritarian regimes worldwide.

Q134 Chris White: Secretary of State, extending that, we were just thinking it should not just be the Middle East and North Africa, it should be to authoritarian regimes worldwide. Why was this recommendation not implemented?

Mr Hague: Our review covers our global policy-covers the whole thing, whatever the nature of the regime. Of course, it is events in the Middle East and North Africa that have given rise to it. But this is a change to our procedures overall, including authoritarian regimes. As the Chairman has pointed out, such issues can arise in other countries as well. So for the purposes of this policy, we are not only concerned with authoritarian regimes. The change in procedures that I have announced and that Vince Cable has been talking about, are changes in procedures globally.

Q135 Chair: Yes, Foreign Secretary, but that does not answer the particular question that the Committees have put to you. It is one thing to look at the global application of the results of your review. We put a different recommendation to you, that you should extend your review to authoritarian regimes worldwide. Why did you not accept that recommendation?

Mr Hague: For this reason, Mr Chairman, this is a worldwide review. It is about our policy towards all regimes of any kind. If you are saying should we have had a particular study of authoritarian regimes-

Q136 Chair: That was the recommendation of this Committee. We asked you to extend your review not just to authoritarian countries in North Africa and the Middle East, but to authoritarian countries worldwide. That was our recommendation, and you chose not to accept it.

Mr Hague: Yes, because it was not confined to the Middle East. If we implement thoroughly, as we certainly intend to do, the changes in procedures that I talked about earlier-more systematic reporting of human rights risks, using a wider range of information, more systematic use of predictive tools and the requirement of end-use monitoring by overseas posts-it will capture what is going on in authoritarian regimes, as well as the rest of the world. So, of course they are included; what is going on all over the world is included in these changes of procedures.

Q137 Chair: The Committees understand that the outcome of the review is going to be applied globally by the Government, but the issue that the Committees put to you was that you should extend your review to authoritarian regimes worldwide-authoritarian regimes in Africa, in Asia and conceivably in one or two countries in South America-and ask yourselves the same questions that you have posed to yourselves on North Africa and the Middle East: do all the extant export licences that we have granted to these authoritarian regimes still comply with criteria 2 and 3? You have not done that. Why not?

Mr Hague: It is a global review. I go back to the same answer. Really you are saying that there should be a bigger change in policy.

Q138 Chair: No, we are saying that there should have been a bigger change in the geographical scope of the review that you carried out.

Mr Hague: I am saying that there is no limit to its geographical scope. Every kind of regime and every kind of country is captured in this review. Clearly, we do not have a meeting of minds here, and I have not seen any other country where we should change our policy and revoke the licences, because the circumstances have not changed. We focused the review on practical change, and I have adopted all the recommendations of the review. I think I see what the Committee is getting at, but we chose to do it in a different way. I did not agree with the recommendation of the Committee.

Chair: We come now to the human rights guidance that the Government have issued in the context of overseas security assistance.

Q139 Ann Clwyd: Before we come to that, you have mentioned end-use monitoring a number of times. It always falls glibly off the lips of officials, but what does it actually mean? Who does the end-use monitoring? In any country I have been involved in I have never been able to identify the people who do the end-use monitoring.

Mr Hague: As you think it falls glibly off the lips of officials, I shall ask the officials to answer that question. Which one of you would like to do that, including how we are improving it?

David Hall: In the assessments that we make of licence applications, we talk extensively to our network of posts, and we expect those posts to inform our assessments as they look to the future and based on past evidence. Part of that information is what has happened to the kit that we have previously licensed. That is what they do. They give us information based on their own investigations and on the extensive discussions with the Governments and the recipients of that equipment, which informs our licence assessments.

Sarah MacIntosh: There are various parts of overseas posts that do that. The defence sections would typically have relationships with the armed forces of the countries they are in, and they will be going into their barracks and participating in their exercises. They will be seeing the equipment and will be talking to people who would use it. Political sections will be doing the same with, for instance, police forces. They will be discussing doctrine and will know what is happening. They might also have security sectoral reform teams working directly with the organisations and will know what they are doing with the equipment. They will be taking a feed from non-governmental organisations, and they will be watching media reporting as well.

Q140 Ann Clwyd: I need a lot of convincing on that, because I remember very well when we were selling arms to Indonesia, which was using Hawk aircraft to intimidate people in East Timor. There was supposed to be end-use monitoring there as well. Actually, the East Timorese were able to spot aircraft; it wasn’t anybody at any of our posts. I know our embassy in Indonesia was rather a long way from East Timor. Nevertheless, we were always assured that Hawk aircraft were not being used there, yet they certainly were being used to intimidate the population of East Timor.

In the same way, I feel that our equipment given to the Saudis, who are present in Bahrain, can also intimidate protests. If you have that sort of build-up-a foreign country in your own country-it is, again, very threatening and intimidating and can have almost the same effect as actually using it against the population.

Sarah MacIntosh: The Indonesia evidence predates my engagement with this. The example that I can give relates to Egypt last year, when the Foreign Secretary and the Business Secretary revoked licences for aircraft for Egypt precisely because they had been used in an intimidatory way and that was identified by posts and reported.

Q141 Ann Clwyd: On the human rights guidance, you wrote to the Chair of the Committee saying that the FCO had published guidance on assessing human rights indications when the Government made decisions regarding the provision of security and justice assistance overseas. You said it "will ensure greater consistency in the human rights approach to security and justice assistance overseas…whilst meeting HMG’s national security priority…consistent with a foreign policy based on British values including human rights." Are we able to see that guidance as a Committee, or is it an internal document?

Mr Hague: I do not think there is any problem with you seeing the guidance.

Q142 Ann Clwyd: What impact do you think it will have when considering applications for arms licences?

Mr Hague: This is about providing security and justice assistance, which can be related to arms for the reasons we were discussing earlier. I was describing how, in the case of Libya, there were licences that related to a training programme. So the linkage here is that the specific reference to the consolidated criteria is contained in checklist A, as it is called, of the guidance, which requires staff to consult the consolidated criteria where the provision of equipment is part of the assistance. So although it is intended that information sought under this guidance can be used to help make decisions relevant to arms exports, the specific test set out in the consolidated criteria must apply when there is a question of exporting arms.

Q143 Ann Clwyd: But the checklist specifies it is not intended to cover the export of military or security equipment. Is that right?

Mr Hague: It is linked to it. They are clearly related issues and therefore checklist A of the guidance refers to the consolidated criteria. There will be security and justice assistance programmes that do not involve the provision of equipment, of course, but where they do, it is necessary to refer across to the guidance as well.

Sarah MacIntosh: It is not intended that the guidance should in any way substitute for the strict application of the criteria through the export licensing process. It would only be an addition to it.

Mr Hague: It is additional guidance, really. On top of the consolidated criteria, this is additional guidance.

Q144 Chair: Foreign Secretary, I just want to take that point a little further. In the Westminster Hall debate on 26 January on the Foreign Affairs Committee’s human rights report and the Government response to it, I referred specifically to the human rights guidance that your Department has issued in the context of overseas security assistance. I made the point that, in your guidance, you detail what you describe as "security institutions"-you go on to define them-that are going to be in receipt of this assistance. I quoted that you say "The institutions typically (but not exclusively) of relevance in this context are: armed forces, police, gendarmeries, paramilitary forces, presidential guards, intelligence and security services (military and civilian)"-it goes on. I went on to express surprise and, indeed, dismay that there did not appear to be any reference in the guidance to the need to conform to the consolidated criteria.

Subsequent to what I said in Westminster Hall, our ever-alert Clerk pointed out that I had made an error, for which I apologise, and that buried away in a microscopic footnote on page 14 of the guidance it does indeed say to officials conducting their checklist that it "is not intended to cover the export of military or security equipment. If the provision of equipment is part of your assistance, you must consult the Consolidated Arms Export Licensing Criteria." I put it to you, Foreign Secretary, particularly as you have said specifically in front of the Committees that assistance is provided through the making available of equipment, which could include items within the arms export control area, that you should reconsider whether this crucial sentence should be promoted from being dismally put in microscopic print in a footnote to having very strong prominence in your human rights guidance.

Mr Hague: That may be a very good suggestion. We will have a look at that.

Chair: Thank you. We will now move on to the arms trade treaty.

Q145 Mike Gapes: Foreign Secretary, the last Government, from 2004 onwards, played a major, leading role in trying to get a legally binding international Arms trade treaty. It introduced and sponsored a resolution in the UN General Assembly in 2006, and, according to the UK Working Group on Arms, since 2006 "the UK has been widely perceived as the lead government on this Treaty process". Can I put it to you that that is no longer the case and that many countries around the world believe, in the words of evidence that we have received, that the Foreign Office’s priority has been "significantly reduced" and that the UK has "rolled back" its leadership and activity on the Arms trade treaty?

Mr Hague: You will not be surprised to hear that I do not agree with that. We are very firmly committed to securing a robust, effective and legally binding Arms trade treaty. The last Government did a good job on this. I will regularly say that, and I think there is strong cross-party agreement on that. We are aiming for a treaty that covers all conventional weapons, including small arms, light weapons, and ammunition. We are coming up to the negotiating conference, which is due to take place in July this year. At the moment, we are raising this frequently-bilaterally and multilaterally. We are playing an active role in all the preparatory committee meetings. We co-ordinate on this within the P5 and the Security Council and in the EU. We have provided project funding for a range of related projects, including research on implementation issues. We have a cross-Whitehall team working on it, and many of the officials sitting alongside me and behind me are closely involved in the negotiation of this.

Q146 Mike Gapes: But, last year, we asked your Minister, Alistair Burt, about this issue and about who was going to replace Ambassador Duncan when he retired. We were assured that an equally high-powered successor would be placed in-post in the same position, somebody of equal seniority and capability. Yet I understand that the head of the counter-proliferation department, Jill Morris, was moved out of that post two months ago, to do another job, and has not been replaced; and that the ambassador for the Conference on Disarmament, Jo Adamson, was announced yesterday to be the leader of the delegation in New York next week, but there is no decision yet on who is to deal with these matters in the period between now and the final conference in July, to which you referred. There is certainly a perception by people who study these things closely that you are downgrading and taking your eye off the ball at this critical moment, as we go into the New York meeting next week and the final stages of the process.

Mr Hague: Sometimes people like to develop particular perceptions, but there is no basis for that. Yes, staff do move around. A lot is going on in the world.

Q147 Mike Gapes: Who is in charge now on the arms trade treaty?

Mr Hague: Sarah can describe. We are restructuring the counter-proliferation department to increase the senior management resource working on the arms trade treaty, and on export control issues more generally. So there is not going to be a shortage of senior staff. Sarah, do you want to describe these personnel changes?

Sarah MacIntosh: Jill Morris-as you know-the former head of the counter-proliferation department has moved to eurozone work temporarily. That job has been backfilled with two officials: one more senior, Peter Hayes, the former ambassador in Sri Lanka, and Martin Hill, the deputy high commissioner in Ottawa.

Q148 Mike Gapes: Is that up until the conference in July or is that just for the interim?

Sarah MacIntosh: That is an interim arrangement that is in place now. As I mentioned earlier, one part of the recommendations of the review of export licensing is the creation of a new department within the directorate of defence and international security, which will be the export control department. It will have two primary functions: the export control licensing system and the arms trade unit, and the arms trade treaty negotiations. That is an additional SMS1, which is the same level as Ambassador Jim Duncan was previously. That is an additional resource at that level. It will be devoted to these two issues. We are in the process of recruiting those. Peter and Martin have been backfilling that gap. The continuity throughout has been provided by me as the director, by Dave Hall, as the deputy head of the counter-proliferation department with responsibility for both those two issues and by Ambassador Adamson who has replaced Ambassador Duncan at the conference on disarmament.

Q149 Mike Gapes: Do you agree-perhaps the Foreign Secretary could comment-with the perception that, just at the key moment, the week before you have this meeting coming up, there is not a permanent person there and there is no continuity therefore? You are restructuring at this time and, understandably, you are sending somebody off to deal with the eurozone crisis. There may be big fish to fry there, but this is the critical moment in this negotiation, yet we haven’t got the person in place who is going to be there to take through this process for the next few vital months.

Mr Hague: We have a lot of senior people dealing with this, and are upgrading this in the way that Sarah describes. I cannot promise you that we never move around in the Foreign Office, but this is going to receive a great deal of senior management time and attention, and ministerial time and attention. I can assure you that we are very strongly committed to this. No Governments have raised with me any lack of readiness or willingness on the part of the United Kingdom Government, but if some want to have a word me about which Governments have this perception, we will soon put it right.

Q150 Mike Gapes: One final question: are we going for a robust treaty or are we allowing the US and others to take the lead and come out with a weaker treaty than would have been the case if we had been in the lead?

Mr Hague: We are going for a robust treaty. We have maintained the ambition expressed under the previous Government. There is a range of views within the permanent five members of the Security Council on this, and part of our job is to raise the level of ambition across the other members of the Security Council and, indeed, other nations.

Q151 Mike Gapes: How optimistic are you that, if there were a range of views-given how the P5 have been split on a number of other questions recently-we are actually in danger of ending up with an arms trade treaty that is not effective because of certain countries resisting small arms being included, for example?

Mr Hague: That is too early to say. We do want them to be included, as I mentioned earlier. I think that the trajectory of these talks at the moment is going in the right direction, but I cannot give you a percentage chance of success on that item. We will do our utmost to have a robust and ambitious treaty, one that will have cross-party support in the United Kingdom.

Q152 Mr Donaldson: Will you be providing training and briefing on the arms trade treaty to your personnel in overseas posts? Will they, in turn, be engaged in raising these matters at all relevant bilateral meetings?

Mr Hague: They are already substantially engaged. Do you want to add any detail on that?

Sarah MacIntosh: An additional answer to Mr Gapes’s question is that the FCO uses its network as one of its most powerful lobbying tools, so although we are having some change in the departmental arrangements in London, the network is in place. It has been lobbying on the arms trade treaty and will continue to do so through the negotiating conference and beyond.

Q153 John Glen: At the review conference on cluster munitions in November, it was reported that there was a move by Israel, China, Russia and Pakistan to insert a weaker alternative. That was resisted, I think, by the British Government. Could you explain what the consequences of that will be? Given that there seems to be an emerging difference of opinion on how to deal with that matter, what will the UK Government do to bring the US and those other countries into line with the agreement and the way of thinking that we have as a Government?

Mr Hague: We did resist that. Together with the vast majority of states, we engaged in the discussion aiming for a draft protocol 6, which would be complimentary to the convention and not undercut it or provide a permanent lesser commitment, with significant and demonstrable humanitarian benefit. We had the final negotiation in December, which failed to achieve consensus, so we have to keep working on it. We want to continue to take all possible opportunities to encourage universal adherence to the convention. It was disappointing that there was not sufficient consensus in December. David might want to add to that from the counter-proliferation department.

David Hall: We are keen to stay true to the gold standard that is the Oslo convention on cluster munitions, while bringing major producers closer to that gold standard. That was the negotiation that was protocol 6, and we will continue to work with those major producers to bring them closer to the CCM gold standard.

Mr Hague: Of course it was debatable whether we should go for or settle for something that fell short of that but could be agreed, or whether we should keep arguing for the gold standard. We thought about that long and hard, and decided that the position of the UK should remain that we wanted to go for the gold standard.

Q154 Nadhim Zahawi: In terms of harmonising EU member states’ arms export policies, what changes, if any, would you like to see to the consolidated criteria and the EU common position on arms exports? How would you ensure that those changes are implemented in Europe? How confident are you that you can deliver?

Mr Hague: There is good co-ordination in Europe. There is a monthly meeting in Europe about the enforcement of the consolidated criteria. Of course, there are differences between the consolidated criteria and the EU common position. They principally relate to criteria in both documents concerned with respect for human rights, but the EU Council common position is fully applied in our export licensing process. The decisions we make are fully in accord with the provisions of the EU common position, so, from a policy point of view, I am satisfied with that. It does require regular, rigorous co-ordination to make sure that the effect of the policy is approximately the same across the whole European Union.

Chair: Foreign Secretary, thank you for your evidence today, and Sarah MacIntosh and David Hall, thank you for your contributions. Foreign Secretary, we look forward to receiving from you, in the very near future, the outstanding material, including the additional written answers that we want from you, please. Thank you.

Prepared 12th July 2012