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The Impact of Arms Transfers on Poverty and Development Report, September 2004

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The Impact of Arms Transfers on Poverty and Development Report, September 2004 The impact of arms transfers on poverty and development Report, September 2004 Mike Bourne Malcolm Chalmers Tim Heath Nick Hooper Mandy Turner Department of Peace Studies The impact of arms transfers on poverty and development, September 2004 Contents Acronyms 3 Acknowledgements 4 Executive summary 5 1. Introduction 9 1.1 The Armed Violence and Poverty Initiative 9 1.2 Arms transfers and poverty 9 1.3 Definition and scope 11 2. Impact of arms transfers on military expenditure 14 2.1 Introduction 14 2.2 The impact of military spending 14 2.3 Putting the costs of arms transfers in context 16 2.4 Arms transfers and economic modernisation 17 2.4.1 Offsets 17 2.4.2 Labour markets 18 2.5 The full costs of arms purchases 19 2.5.1 New for old? 19 2.5.2 Off-budget purchases 19 2.5.3 Military aid and financing arrangements 21 2.5.4 Arms transfers and foreign exchange 21 2.6 Are arms imports cheaper than domestic production? 21 2.6.1 Self-sufficiency and arms proliferation 21 2.7 Conclusion 22 3. Impact of arms transfers on internal conflict dynamics 23 3.1 Introduction 23 3.2 Strengthening state capacity to combat crime and non-political violence 24 3.3 Impact of arms transfers on conflict dynamics 24 3.3.1 Deterrence effect? 25 3.3.2 Ensuring peace? 25 3.3.3 Destabilisation? 26 3.3.4 Defeating a rebellion? 26 3.3.5 Ensuring victory? 26 3.3.6 Escalating violence? 27 3.3.7 Forcing governments to negotiate with rebels 29 3.4 Contributing to extent and severity of human rights abuses 29 3.5 The costs of conflict 30 3.5.1 Impact of conflict on development 30 3.5.2 Scale of violence 32 3.6 Leakage and Diversion: Licit to Illicit 32 3.7 Conclusion 33 1 The impact of arms transfers on poverty and development, September 2004 4. Impact of arms transfers on inter-state conflict dynamics 35 4.1 Introduction 35 4.2 Arms transfers and inter-state war 35 4.3 Protection of borders and peacekeeping capacity 36 4.3.1 Dealing with conflict spillover 36 4.3.2 Combating organised crime 36 4.3.3 Enhancing peacekeeping capacity 36 4.4 Arms transfers and belligerent state behaviour 37 4.5 Arms transfers and arms races 37 4.5.1 Ethiopia/Eritrea 38 4.5.2 Taiwan/China 38 4.5.3 South America 38 4.5.4 India/Pakistan 39 4.5.5 The cost of arms races 39 4.6 Inter-state rivalries and the “multiplier effect” 39 4.6.1 Inter-state weaponry 40 4.6.2 Regional multiplier effect of civil wars 40 4.7 Conclusion 41 5. Impact of arms transfers on levels of corruption 42 5.1 Introduction 42 5.2 Corruption in the arms trade 42 5.2.1 What do we mean by corruption? 43 5.2.2 Bribes and commissions 43 5.3 Causes of corruption 43 5.3.1 Supply side – “push” factors 43 5.3.2 Demand side – “pull” factors 44 5.3.3 Do offsets increase potential for corruption? 44 5.3.4 Anti-bribery measures 45 5.4 Corruption and economic growth 46 5.5 Corruption, inappropriate purchases and higher prices 46 5.6 Supporting corrupt regimes 47 5.7 Conclusion 48 6. Arms transfers to developing countries: a balance sheet 49 6.1 Implications for export licensing 49 Bibliography 51 Boxes and Tables Box 1 £3bn arms package for South Africa 20 Box 2 How transfers to the Philippines are helping to escalate conflict 28 Box 3 Angola 1999 – did arms transfers help end the conflict 31 Box 4 Bofors 1986 – the deal that shocked India 45 Table 1 Top 5 upper middle income arms importers 1997-99 ($) 13 Table 2 Top 4 UMIC arms importers 1999: arms imports as a % of total imports 13 2 The impact of arms transfers on poverty and development, September 2004 Acronyms AVPI Armed Violence and Poverty Initiative DFID Department for International Development ECOMOG Economic Community of West African States Monitoring Group EU European Union FMLN Farabundo Marti National Liberation GDP Gross Domestic Product GPA Agreement on Government Procurement IDF Indigenous Defensive Fighter IMF International Monetary Fund LIC Low Income Country LMIC Lower-Middle Income Country LTTE Liberation Tigers of Tamil Eelam MILF Moro Islamic Liberation Front NGO Non Governmental Organisation PRGF Poverty Reduction and Growth Facility RUF Revolutionary United Front SA South Africa SALW Small Arms and Light Weapons UK United Kingdom UN United Nations UNAMSIL UN Mission in Sierra Leone UNDP UN Development Programme UNITA Union Nacional por la Independencee Totale do Angola WMEAT World Military Expenditure and Arms Transfers WTO World Trade Organisation 3 The impact of arms transfers on poverty and development, September 2004 Acknowledgements This report was prepared by the Centre for International Cooperation and Security based in Bradford University’s Department of Peace Studies. It is part of a wider project – the Armed Violence and Poverty Initiative – which is being funded by the UK government’s Department for International Development (DFID). Special thanks to Thom Oommen for helping to prepare this report and to Professor Keith Krause, Professor Ron Smith, Geraldine O’Callaghan, Charlotte Scawen and Richard Haviland for comments on various drafts. Although it has not been possible to incorporate every one of their suggestions, we are deeply indebted to them all for the time and effort they have put into helping to improve the paper. The analysis and opinions expressed in this report are those of the authors and do not necessarily represent the views or policy of DFID or the UK government. 4 The impact of arms transfers on poverty and development, September 2004 Executive summary This report was prepared by the Centre for International Cooperation and Security based in Bradford University’s Department of Peace Studies. It is part of a wider project, the Armed Violence and Poverty Initiative (AVPI), which is being funded by the UK government’s Department for International Development. There appears to be a close correlation between levels of armed violence and poverty, but to date this has not been fully documented or analysed. The AVPI aims to fill that gap. The AVPI is made up of four projects: 1) A Briefing Papers series on armed violence and poverty reduction measures in the areas of DDR (Disarmament, Demobilisation and Reintegration), SSR (Security Sector Reform), Conflict Assessment, and Rural Livelihoods. 2) An assessment of the impact of small arms projects on arms availability and poverty. 3) A research project which documents and analyses the circumstances in and processes by which armed violence exacerbates poverty and development. 4) This paper, which is the result of a research project documenting the impact of arms transfers on poverty and development. This Initiative, which expanded beyond DFID to involve a number of donor agencies and NGOs, grew out of a concern to understand the problems created by arms availability and their violent use, and of the ways in which measures to reduce armed violence can be integrated into poverty reduction work at both policy and programme level. This paper on the impact of arms transfers will be used to encourage and enable DFID country programmes to assess whether a proposed arms transfer is likely to impact negatively on poor people, poverty and poverty reduction programmes. Further analysis of the interrelationship between the findings of this paper, and those of the AVPI as a whole, can be found in the AVPI Synthesis Report. In recent years, both governments and civil society organisations have become increasingly concerned at the potentially negative impact of arms transfers on poverty and development.1 Perhaps the clearest indication of this concern has been the European Union’s adoption, in 1998, of a Code of Conduct for Arms Exports. This specifically calls upon member states to assess “the compatibility of an arms export with the technical and economic capacity of the recipient country, taking into account the desirability that states should achieve their legitimate needs of security and defence with the least diversion for armaments of human and economic resources.” This criterion (“Criterion 8”) in turns draws on the UN Charter itself, which refers to the responsibility of its member states to “promote the establishment and maintenance of international peace and security with the least diversion for armaments of the world’s human and economic resources”. The EU Code of Conduct requires Member States to look to “relevant sources such as UNDP, World Bank, IMF and OECD reports” to determine “whether the proposed export would seriously hamper the sustainable development of the recipient country” and to “consider in this context the recipient country's relative levels of military and social expenditure, taking into account also any EU or bilateral aid.” 1 DFID (2000); Control Arms (2004). 5 The impact of arms transfers on poverty and development, September 2004 Yet the potential impacts of arms transfers on poverty and development extend well beyond those covered in Criterion Eight, which is concerned primarily with the opportunity costs that they involve. Crucially, arms transfers can affect the occurrence, nature and outcome of armed conflicts (both intra- and inter-state), which in turn can have a significant impact on levels of poverty. In some cases, arms transfers can contribute to peace and development by deterring rebellion and aggression, strengthening legitimate security functions, and helping governments combat crime and violence. At the same time, arms transfers also have the capacity to directly and indirectly undermine development, by inducing insecurity, contributing to abuses of power, and diverting arms into illegitimate hands.
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