200 BUSINESS ETHICS The Ethics of the International Arms Trade Gavin Maitland Unless one is a pacifist there is little difficulty in theory in ethically justifying a country's entitlement to produce or to purchase, or even to market, weapons for the preservation of internal order or external peace. In practice, however, the international arms industry gives considerable cause for ethical misgivings, which are here explored. ``It is difficult to escape from the notion that the primary factor behind the international sale of arms is the generation of profits. If companies are left unchecked, there is considerable evidence that companies will exploit commercial opportunities to the detriment of ethical considerations.'' Introduction over £400 million and £900 million respec- tively. It is likely that the numbers are much rom time to time, difficult questions arise larger in practice. The UK sports many of the F in business about whether certain trans- international heavyweights. Three companies actions should be made or whether certain in particular make interesting case material: customers should be dealt with. From time to GKN, Vickers and British Aerospace. time, the word 'ethics' arises. Ethical issues Although also involved in other industrial sometimes even get in the way of business. If sectors, GKN and Vickers' activities are your business is international arms trading, largely driven by the manufacture of arms. ethical issues may rise more frequently than GKN, the Hampshire-based arms manufac- you may like to admit. turer, generated annual revenue of almost The morality of manufacturing and selling £3 billion in 1996,2 a third of which was in the military arms is a difficult issue in itself. category of ``Special vehicles'', a euphemism However, as it is a fact of modern life that for armoured cars and personnel carriers. arms are manufactured and sold in vast Vickers, the Newcastle based engineering numbers, the arguments will focus on the company, is a name synonymous with the practice of the international trade in arms as famous Challenger tank and has long been it exists today and some ethical issues which the main provider of armoured vehicles to the may face some of the companies concerned. British Army. It generated an annual revenue of £1 billion in 1996,3 a third of which was also attributed to ``Defence systems''. Big business Alongside GKN and Vickers sits the shin- ing light of the UK arms trade, British Aero- The international arms trade is big business. space. The 1996 annual report shows that total Backed by national traditions of warfare, company sales were £7 billion, £5 billion of many companies, especially in the United which were attributable to the ``Defence'' States, France and the UK, have impressive segment, representing about 70 percent of track records of excellence in the international the total. Revenue by region shows that arms trade. To give some idea of the size of 41 percent and 14 percent of turnover is the industry, a recent newspaper1 reported generated in the Middle East and Asia that Britain's arms manufacturers annually respectively. sold over £600 million worth of arms to allies So, let's consider these numbers for a in NATO and other western European coun- moment. 70 percent of total annual revenues tries. During the same time period, the value relate to the sale of arms ± a sizable propor- of arms sold to Asia and the Middle East was tion in itself ± and 55 percent of the total was # Blackwell Publishers Ltd. 1998. 108 Cowley Road, Oxford OX4 1JF Volume 7 Number 4 October 1998 and 350 Main St, Malden, MA 02148, USA. A EUROPEAN REVIEW 201 generated in the Middle East and Asia. A British arms exports to Indonesia include back-of-an-envelope calculation shows that Scorpion tanks, Hawk fighter jets, frigates, as approximately £3 billion (or 40 percent) of well as armoured cars and personnel carriers. total sales are generated through the ``de- GKN produces Tactica armoured personnel fence'' category (i.e. military arms) in the carriers and water cannon which were sold to Middle East and Asia. This is in the context the regime of President Suharto in Indonesia. of the Middle East and Asia, arguably the The Tacticas were regularly observed being most volatile regions in the world. The used against demonstrators in pro-democracy dependency of British Aerospace on the sale riots in Jakarta. of arms is also a significant factor. In 1996, A similar dilemma exists with China. There British Aerospace showed losses in all its has been a European Union ban on arms sales activities except ``defence''.4 Given that profits to China since the 1989 Tiananmen Square from the manufacture and sale of arms are massacre, but each member country is largely effectively supporting other operations, more allowed to interpret the embargo as it sees pressure may be brought to bear on the con- fit. Two British companies, GEC-Marconi and tinuing high performance of the arms sector Racal-Thorn, were allowed to sell maritime to support other activities. and airborne radars to China in 1996. Racal So, is there an ethical issue here? Surely it also agreed to supply six-eight Search water is a source of pride that British companies are surveillance radars to the Chinese navy. The holding their own and prospering in the Western democracies, led by the Clinton competitive world market. Many jobs depend Administration, have largely decided that on the continuing prosperity of these com- the spread of economic freedom in China panies and the sale of arms constitutes an will eventually bring in political freedoms important part of a modern economy. Per- and human rights. Normal trading relations, haps that is true. But perhaps it is not ethical. with the exception of arms sales, should be permitted as far as possible, despite frequent reports of human rights abuses. Money makes the guns go round Given the high proportion and value of arms which are sold to the Middle East, It is difficult to argue that the commercial Africa and Asia, it is increasingly difficult to activities of these companies are entirely argue that their supply is not driven by ethical and are not significantly influenced financial gain. Ethical considerations tend to by the drive for profits. Although the execu- be relegated far down the list of priorities tion of nine human rights activists in 1995 when large profits are on offer. in Nigeria increased pressure on western governments for international action against the military regime, and the Europeans and So keep on selling . Americans made vague noises of displeasure, little action was taken. There was talk of an It cannot be denied that there are compelling oil embargo, a ban on sporting links was arguments in favour of allowing the arms implemented and travel visas were with- trade to flourish. Arms traders are commer- drawn, but Vickers still completed an arms cial companies, trying to generate revenue deal worth $280 million.5 and profits from customers by selling inno- Although arms sales to certain countries, vative products. They are subject to com- such as Iraq and China, are not permitted petitive pressures like any other business by most western governments, arms are sector and they must demonstrate that their exported to many other countries which products are bigger, better and more cost may not have the same regard for human effective than anyone else's. Their own rights. Countries which cause concern to survival is at stake if they are unable to human rights activists include Turkey, compete successfully, so their activities must Indonesia, Nigeria and the British arms be geared towards satisfying the demand for industry's single biggest customer, Saudi their goods and services to make an ultimate Arabia. All three companies are heavily profit. If excessive restrictions are placed on involved in arms exports to these countries. their activities, then they will operate at a Vickers, for example, recently launched a competitive disadvantage against foreign campaign to win a £3 billion order for 800 companies which are not subject to the same Desert Challenger tanks for export to Saudi constraints. Arabia, whose record of human rights is, at Arms can also be exported for legitimate best, questionable. If that was not enough of a purposes. Arms traders are quick to point out cause for concern, the decision is exacerbated that most weapons sold to foreign govern- by the fact that the tanks were built in Turkey. ments are never used in anger. Who can deny # Blackwell Publishers Ltd. 1998 Volume 7 Number 4 October 1998 202 BUSINESS ETHICS the right of a country to defend its citizens Going back to British Aerospace, the against foreign aggressors who may only be ``defence'' category of the 1996 report includes deterred by the threat of retaliation? In that the proceeds from the sale of 8,000 electric case, the arms are used for largely passive shock batons which was made to Saudi purposes, even if there is the unspoken threat Arabia. The batons inflict pain through a of violent reaction in self-defence. 4,000 volt shock, but the sale was not illegal, If that was not enough, many governments because the batons were not made in the UK. believe that it is essential for countries to Whether the use of such batons would maintain their own arms manufacturing capa- constitute ``internal repression'' may depend bility. As Western governments remain on whose point of view was considered. If focused on the need to maintain independent the shock batons were used to prevent crime military strength to deal with periodic con- or riotous assembly, it would be difficult to flicts, such as the Gulf and Bosnia, it is often argue that their use was not justified.