Australia seeks a bigger slice of the destructive global arms trade

The Australian government wants to help arms companies cash in on the global weapons' boom.
January 13, 2017

Throughout last year, devastating conflicts raged in Iraq and Syria. The Afghan War entered its 16th year with a record number of civilians deaths, while in Yemen, a Western-backed, Saudi-led coalition continued to bomb civilian targets using British and American-made weapons.

More people are being displaced by war and persecution than ever before, according to the United Nations. This is creating an unprecedented humanitarian crisis.

War is bad news for human beings. But it is good news for the arms trade.

A Defence Trade Report published last June by IHS Janes said the value of the global arms trade hit a record high of US$65 billion in 2015 and was predicted to rise to $69 billion during 2016.

In our region, heightened tensions over territorial disputes in the South China Sea have created big opportunities for arms exporters. Arms imports by Southeast Asian countries rose by 71% between 2009 and last year, the report said.

The Australian government wants to help arms companies cash in on the boom.

Australian arms industry

The Australian arms industry consists of the Australia subsidiaries of several global “defence primes” (large companies such as BAE Systems, Thales and Lockheed Martin), along with Australian shipbuilding prime, Austal, and about 3000 “small to medium sized enterprises” (SMEs).

The federal government’s 2016 Defence Industry Policy Statement said the global primes account for about 50% of employment in the industry and the SMEs operate “mostly as subcontractors to prime companies”.

Minister for Defence Industry Christopher Pyne said the government wants to help Australia to become a “world player” in the arms trade and a net exporter of arms, meaning that we would export arms than we import. This would be a dramatic shift.

Australia sits at number five on the list of arms importing states and number 20 on the list of exporting states based on figures from 2011-2015, according to the Stockholm International Peace Research Institute (SIPRI). A comparison of imports to, and exports from, Australia during this period using SIPRI’s arms transfer database suggests that Australian arms imports are 11-12 times greater than its arms exports.

SIPRI data also shows that to compete with the top five arms-producing states, the US, Russia, China, France and Germany, Australia would have to increase its exports at least fifteen-fold.

More arms exports would mean more Australian involvement in a trade that undermines peace, exacerbates conflicts, facilitates human rights abuses, diverts resources from social spending, and reportedly generates 40% of all corruption in global transactions.

British research and advocacy organisation, Campaign Against Arms Trade, says: “While the benefits of the arms trade accrue to international companies, the costs are to the people on the receiving end of the weaponry, the citizens and taxpayers of both buying and selling countries, non-military industry, and national and international security”.

Government support

Government support for arms and arms-related exports has grown since the Australian arms industry was corporatised and privatised in the 1980s and 1990s.

Austrade provides export advice to arms companies and the Export Finance and Insurance Corporation helps them to access finance. Several other initiatives have been introduced in the past 10 years to promote sales.

In 2007, the Howard government established a unit within the Department of Defence specifically to promote “defence” exports. The Defence Export Unit, later renamed Team Defence Australia (TDA), organises trade missions and arranges for delegations to attend international arms fairs.

The Department of Defence says that since 2007, “TDA has assisted 288 defence industry companies to secure export contracts for defence capabilities and technologies to the value of approximately $785 million”.

Under the Global Supply Chain program, launched by the Rudd government in 2009, the government pays the Australian subsidiaries of global “defence primes”, Boeing, Raytheon, Thales, Lockheed Martin, BAE Systems, Northrop Grumman and Rheinmetall, to help smaller Australian companies win work with them.

In 2012, the Australian Military Sales Office (AMSO) was established to “facilitate the overseas sales of Australian-made capital equipment through government-to-government channels and to provide assistance in commercial-to-government export”, the Department of Defence said.

Last year, the Turnbull government announced several measures it says will expand the local arms industry and boost exports. It includes an 80% rise in Australia’s military spending over the next decade and the creation of a new $230 million “Centre for Defence Industry Capability”.

The changes prompted one industry magazine to proclaim that “defence industry is the new black”.

Turnbull says that he sees government spending in the Australian arms industry as “a key part of our economic plan”, which will “will drive the jobs and the growth in advanced manufacturing, in technology, right across the country”.

However, as the Medical Association for Prevention of War has pointed out: “The 2016 Defence White Paper and federal budget treated major weapons acquisitions programs as job-creation schemes, completely ignoring the much wider regional ramifications of contributing to, rather than attempting to rein in, the arming of our region.”

Arms exports inquiry

The government’s embrace of the arms trade appears to have been influenced by the arms industry itself. Arms companies were given the chance to advocate for more government assistance during a recent inquiry into federal government support for Australian arms industry exports by the Joint Standing Committee on Foreign Affairs, Defence and Trade.

The inquiry was initiated at the request of then-defence minister David Johnson and conducted over 2014-15.

Submissions were made by the Australian subsidiaries of global “defence primes”, including Thales, BAE Systems and Lockheed Martin, as well as Australian prime Austal, and SMEs such as CEA Technologies and Ferra Engineering. Arms company representatives were given further opportunity to put their views at public hearings.

‘Defence industrial base’ argument

Government support for arms exports is often justified on the ground that it is necessary to maintain a country’s “defence industrial base”, an argument that featured strongly in the submissions. According to this line of reasoning, governments must ensure that domestic industry is maintained at a level that could sustain the nation’s military forces during a conflict, when recourse to external suppliers may be limited.

In the post-privatisation world, this means maintaining a profitable arms industry. Exports play a crucial role by enabling arms companies to achieve “economies of scale”, so the argument goes, and should therefore be promoted by government.

The inquiry’s terms of reference included “assessment of the export support given to Defence industry by governments of comparable nations”. Many submissions complained that arms exports are not supported enough in Australia compared to major exporting states, such as Britain and France.

Australian shipbuilding company, Austal, said that “strong Government support for Australian defence industry exports is a national security issue that warrants considerable co-ordinated effort across government”.

Similarly, Northrop Grumman Australia said: “Government policy in supporting defence exports should be viewed, as it is in many other developed countries, as an integral element in strengthening Australia’s own national defence capabilities.”

MBDA Australia, the subsidiary of British missile company MBDA UK Ltd, said the Department of Defence should move away from a strictly competitive approach towards procurement in areas where it is “essential to maintain a level of in-country capability”. It should instead pursue partnerships with industry.

The defence industrial base argument is a convenient, but false, justification for public expenditure that increases arms company profits, but does nothing to make Australians safer.

As Thales Australia admitted in its submission to the inquiry, Australia is “not directly threatened by another power”. The 2016 Defence White Paper also acknowledged that “there is no more than a remote prospect of a military attack by another country on Australian territory in the foreseeable future”.

The Australian military is more likely to be engaged fighting US wars overseas than defending Australia from attack. High levels of military spending are driven not by genuine defence needs but by our politicians’ desire to prove to the US that Australia is not a “strategic bludger”.

Expanding the local arms industry will do nothing to tackle the real threats to security, here or around the world — namely climate change, resource depletion and inequality. Moreover, arms exports promote military responses to international disputes, increasing the likelihood of future armed conflicts.

Jobs?

Another justification for government support of the arms trade, often invoked by politicians, is that it supports thousands of Australian jobs. However, the Australian government could choose to support workers in less harmful industries.

Research by British group Campaign Against Arms Trade (CAAT), has shown that the skills that currently benefit British arms companies could be transferred into the renewable energy sector. A 2007 study by US academics found that government spending of US$1 billion on healthcare, education or transport would create more jobs than the same amount spent on the military.

The jobs argument also ignores the fact that for corporations, the pursuit of profit overrides allegiance to their workforces, which they will abandon if the profit motive dictates.

In its submission to the inquiry, Austal complained that Australian labour costs are often “more than ten times those of developing countries such as China and Vietnam”. The company had opened a shipbuilding facility in the Philippines in 2012, the submissions said, “due to the significantly lower labour costs” there.

Lockheed Martin Australia listed “high labour rates” as an impediment to increased arms exports, as they “make Australian Industry inherently expensive”. Ferra Engineering also mentioned the “relative high cost of Australian labour” in its submission.

[This is the first of a three-part series, The next article will cover government promotion of arms sales, human rights and the role of the Defence Export Control office.]

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