February 10, 2010

BAE and the Arms Trade

Posted in Europe, Politics, Trade tagged , , , at 04:28 by Matthijs Krul

The British arms manufacturing giant BAE (British Aerospace) has been fined some 286 million pounds sterling for bribing government officials in Third World countries to place orders with their company.(1) Among other activities, they bribed officials in Tanzania to order an advanced radar system for defense in that country, even though Tanzania is not likely to be at war with anyone and is one of the poorer nations in the world. What makes the case all the more remarkable is the fact that earlier on British prosecutors intended to prosecute over bribery of Saudi officials to the same purpose, but that a combined action from then Prime Minister Tony Blair and the Attorney General, Lord Goldsmith, quashed the case, in order not to offend the Western ‘allies’ in Saudi Arabia. In this manner, they showed that neither rule of law nor combating theocracy mean anything to the gentlemen politicians who rule our countries, but that only strategic maneouvers do. Little seems to have changed since the days of the ‘Great Game’ and the Victorian approach to international relations.

However, that is not all that may be said about it. BAE’s case is part of a wider and highly underreported scandal: the scandal of mass production and sale of armaments to poor and underdeveloped nations on the part of the wealthy ones. In many postcolonial states, there are constant conflicts between them as well as within them, often remnants of social conflicts that arose in the days of colonialism and in that period had been deliberately fostered to prevent a unified resistance. This not only undermines the potential and viability of the postcolonial countries, but it also means that those countries now get to pay for the privilege of their ill-constructed colonial structures by buying weapons en masse from the rich producers, despite the poverty of their nations. This is not to say, of course, that the local leaders have no involvement in this. Most Third World nations are ruled by small extortionist elites who pocket the wealth of their countries and waste the public funds on personal consumption and on buying weapons for organizations to repress their people. However, as the BAE case shows, even where this is not the proximate cause, the arms manufacturers themselves are by no means above arranging such malfunctioning structures and corruption to appear in those countries if this benefits their sales. They cannot be blamed for this any more than one can blame mercenary companies for being hired to do dirty jobs – this is what they are for, and to them, this is just another way to accumulate capital.

Nonetheless, the effects are not to be underestimated. The countries’ purchase of arms on a large scale increases their debt and wastes their money on unproductive endeavours. What’s more, if one nation starts buying weapons systems, neighbouring nations are likely to do the same to maintain their defense position, leading to small or even large scale arms races. Since any competitive race is a zero-sum undertaking, every single dollar equivalent spent in this manner is inefficient and irrational spending. Even just small arms can have a deleterious effect by spreading to militias and other groups, thereby undermining the stability of the country and the power of the central government to enforce policy, which is a prerequisite for effective rule in modern and complex societies. Since much of the funds for purchasing arms have to be borrowed, interests on the debt will ensure that future generations keep paying the price, even more since the weapons systems, to be effective, have to be maintained and upgraded also.

One could argue, of course, that sometimes the sale of weapons is justified – what if a given group is rebelling against a tyrannical government, and need arms to be succesful? There is some truth to this, and yet because arms companies operate on a private, for-profit basis, they are not likely to discriminate much between purchasers. Even more strongly, their incentives are to have both groups in a conflict armed as much as possible, leading to deadly stalemate, since this will maximize their sales. Indeed governments can try to ‘steer’ this somewhat by regulating what can be sold to whom, but arms manufacturers routinely evade such regulations by exporting arms to third parties, who will then sell them in turn to the originally intended purchaser. In this manner, strategic control over arms production on the part of the Western governments is limited. Which is not to say that they don’t have a hand in the matter, either. Since such companies operate privately, they are also economic assets that need to stay competitive vis-á-vis other arms companies in other countries, and as a result, Western governments massively subsidize their own arms industries. Just British indirect, direct and R&D subsidies to arms manufacturers alone amounts to an estimated one billion pounds a year.(2) Needless to say, democratic control over what is done with these weapons and who do and do not get them is virtually nonexistent, which defeats the argument based on ‘supporting the righteous’. A much more sinister counterargument is also the nature of arms that are sold – advanced weapons systems are highly unlikely to be useful to anyone but national governments (except in cases of advanced civil war), and as a result are not much use to rebel groups. More importantly, however, a significant part of arms sales consists of equipment for ‘policing’, which is everything from batons and handcuffs to outright torture equipment, such as stun guns. According to Amnesty International, Germany alone has eleven companies selling such equipment, Israel and France each six, and the United States an impressive forty-two.(3) Governments are unwilling or unable to stop this because of the rules of capitalist competition: when Britain banned the export of ‘crowd control’ equipment, such as tear gas, to Kenya over human rights concerns, the Kenyan government simply bought from a French company instead.(4) What’s more, often they are the same people in any case: between 1984 and 1994, some 1.838 officers and senior employees of the Ministry of Defence in Britain were permitted to take up employment in the arms industry.(5) As always, the ruling class goes where the money is.

Is there nothing to be done about this? There is. Governments could nationalize their arms industries and so remove the capitalist moral hazard built into the arms trade. More democratic structures in the economy and in our politics will then give people the opportunity to have a say in what arms are sold to whom, if at all, and allow the necessary transparency to prevent blatant corruption and malfeasance of the kind displayed in the BAE case. Moreover, with no imperial interests, there is less reason to be involved in mass export of weaponry in the first place, which will allow the productive capacity to be put to better uses. Unionized employees of Lucas Aerospace in the late 1970s came up with a detailed plan, based on the actual manufacturing capacity of the company they were employed by, detailing how this capacity could be used to produce medical equipment, transport vehicles and components and energy products instead. The then Labour Government of course failed to make any use of the potential of this plan, but the idea is a good one and will allow this deadly industry to be greatly reduced without necessary unemployment or great economic ruptures.(6) This will allow us to put a meaningful end to this disgraceful trade. Because as President Eisenhower put it: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”(7)

1) “BAE Systems handed £286m criminal fines in UK and US”. BBC News (Feb. 5, 2010).
2) Gideon Burrows, The No-Nonsense Guide to the Arms Trade (London/Oxford 2002), p. 79.
3) Ibid., p. 42.
4) Ibid., p. 52.
5) Ibid., p. 118.
6) See: Tim Webb, The Armour-Plated Ostrich (London 1998).
7) Address by President Dwight D. Eisenhower, called “The Chance for Peace”, delivered before the American Society of Newspaper Editors, April 16, 1953. Generally called the ‘Cross of Iron speech’.

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