The Arms Trade, Debt & Development

Written by Susan Willett, ©May 1999

Funding for the research was provided by the Trust for Research
and Education on the Arms Trade (TREAT)

Contents

Preface

Introduction

Section I: Sustainable Development and Security

Poverty and Conflict | Military Expenditure, Debt and Development
Current Military Expenditure Trends in Developing Countries | Arms Sales
Debt & Conflict | The Cost of Conflict | HIPC Debt Initiative | Odious Debt
Post-Conflict Societies and Debt

Section II: UK Policy Towards the Arms Trade, Debt and Development

Development Policy | The UK Government and its Debtors | UK Arms Trade Policy

Section III: Case Studies

SIERRA LEONE | Economic Performance & Development | UK Policy
KENYA | Economic Performance and Development | Security
INDONESIA | Economic Performance & Development | UK Policy | Debt & Arms Sales
SOUTH AFRICA | Economic Performance & Development | The UK’s role
The Rearmament of South Africa

Conclusion

End Notes

Acronyms

Preface

This report highlights the inextricable links between war and conflict on the one hand, and high levels of debt on the other. Germany's high levels of First World War debt degraded her economy and provided a breeding ground for militarism and fascism. Today a similar pattern is repeated in the poorest countries. There is a strong correlation between highly indebted countries and countries which have descended into civil war and militarism.

High levels of indebtedness come about, in part, because political elites in the poorest countries borrow recklessly for war. Powerful creditors are equally reckless and compulsive in providing loans to finance the purchase of weapons.

Just as Germany needed both debt relief and a Marshall Plan after World War II, so do the poorest countries. Without debt relief these countries cannot escape from the vicious cycle. The facts are frightening. During the 1990s alone there have been 39 major conflicts with more than 4 million people killed. Nine out of ten casualties are civilians. There are over 200,000 child soldiers in the world - a corruption of childhood which threatens all of our futures.

In sub-Saharan Africa there are fourteen heavily indebted poor countries involved in either a regional war or a civil conflict. The cycle of debt and conflict has not been broken, and the role of the west has frequently been to pour fuel on the flames of regional and ethnic violence and instability. This report shows how major arms exporters like the UK (in 1997 the second largest arms exporter in the world) have supplied arms to oppressive regimes, and through the Export Credits Guarantee Department (of the DTI) guaranteed the loans used to buy them. It supports the Jubilee 2000 position that loans made to corrupt dictators, such as those in Nigeria and Indonesia, were made in the knowledge they would be misused or corruptly diverted. Finally, it shows the meanness and short-sightedness of creditors, whether they be the governments of the G8 or the multilateral lenders of the IMF and World Bank, in failing to provide the debt relief necessary to rebuild ‘post-conflict’ societies.

Jubilee 2000 is a global grass-roots movement calling for a debt-free start to the millennium for over a billion of the world's poorest people. Economic prosperity for all, not just the few, is the best insurance against war and conflict. We call for a fair, and transparent process to assess the debts. We want to ensure that liability for bad loans and bad debts does not only rest with the debtor. And we insist that organisations representing ordinary people in the indebted nation should play a part in ensuring that resources released by debt relief reach the poor. There are some signs of progress on debt, and western governments are at last beginning to look at codes of conduct for their export credit departments, to place checks on taxpayer subsidies for arms dealers and exporters. This is a start, but it needs to go much further. Only then can we be sure of providing a more certain and secure future for the millions suffering from the twin tragedies of debt and war.

by Ann Pettifor
Director of the Jubilee 2000 Coalition

Introduction [top]

Poverty is one of the root causes of violence. Many of the most heavily indebted poor countries (HIPCs) in the world are currently engaged in, or emerging from conflict. Protracted conflict inevitably leads to highly militarised societies, reflected in above average levels of military expenditures and large numbers of combatants under arms.

Conflict provides lucrative markets for arms dealers, of both a licit and illicit nature. In order to purchase arms poor countries cut public expenditures in health and education and borrow foreign exchange from international creditors. The poor become poorer and conflict becomes more widespread. This sets up a vicious cycle of debt, underdevelopment and conflict, which can only be broken if radical action is taken by the international community to confront the systemic nature of poverty and underdevelopment.

A fundamental starting point for comprehending these issues is to explore the complexities of the damaging relationship between poverty and conflict on the one hand, and the positive relationship between sustainable development and security on the other. These are the structural elements that contribute to the problem of debt and underdevelopment. Arms transfers and militarism are the triggering factors that exacerbate debt, poverty and conflict. These issues are examined in detail in the first part of the paper. The second section examines some of the existing contradictions in the UK’s policies towards development, debt and the arms trade. The final section provides case studies which explore the relationship between development, debt and the arms trade in two HIPC countries - Sierra Leone and Kenya, and two middle income countries - Indonesia and South Africa.

Section I: Sustainable Development and Security [top]

The international community concerned with peace and security has been slow to recognise the importance of sustainable development to security, but as the United Nations Development Programme (UNDP) has observed ‘it is not possible for the community of nations to achieve any of its major goals - not peace, not environmental protection, not human rights or democratisation, not fertility reduction nor social integration - except in the context of sustainable development that leads to human security.³

Sustainable development is a wide-ranging concept referring to a simultaneous improvement in the environmentally supportable economic output of a country, the advancement of employment opportunities, the promotion of social well-being and the eradication of poverty. Sustainable human development as advocated by the UNDP is intrinsically related to the creation of social stability by virtue of the fact that it seeks to remove discriminatory factors within an economy (sources of conflict) by providing opportunities for all members of society to enrich their socio-economic potential.

  Poverty and Conflict [top]

Despite the significant development gains which have been made in the last three decades there are still an estimated 1.3 billion people who live in abject poverty, whose economic circumstances have deteriorated over the last ten years.

According to the World Bank, the minimum requirement for a basic standard of living is an annual income of $370 (‘$’ are ‘US$’ unless otherwise indicated). In 1997 average per capita income in low income countries in Sub-Saharan Africa was $350 per annum, life expectancy at birth was 59 years, infant mortality was 78 per 1,000 live births and illiteracy was 47% of the population over the age of 15.⁴ The average annual growth of real gross domestic product (GDP) in Sub-Saharan Africa - the poorest region in the world - has fallen from 2.5% between 1985-1989 to 1.9% between 1990-1997.

Table 1: Average Annual % Rate of Growth In Selected Sub-Saharan African Countries
 

	1975-84	1985-89	1990-97
Angola	-	4.7	-1.6
Burundi	3.8	5.1	-2.8
Cameroon	8.5	-0.1	-0.9
Congo, Democratic Republic	-0.3	1.7	-6.7
Ethiopia	-	4.1	3.5
Gambia	4.3	3.3	2.4
Kenya	4.7	5.9	2.1
Liberia	0.1	-1.2	-
Mozambique	-	6.0	4.2
Rwanda	6.8	2.9	-5.5
Sierra Leone	2.0	0.8	-3.3
Sudan	2.6	0.9	-
Zambia	0.2	2.3	-0.4

Source: World Bank Data 1998

The widespread economic collapse of many sub-Saharan states has undermined the social cohesion of societies and exposed the inability of the state to extend basic security to its citizens, reflected in the widespread proliferation of humanitarian emergencies and conflict on the continent. In many cases this has led to the loss of political legitimacy and the subsequent collapse of states. Collapsing states are defined by Zartman as ‘a situation where the structure, authority (legitimate power), law, and political order have fallen apart’.⁵ Throughout the African continent, the collapse of states is reflected in a general deterioration in central authority, a disintegration of social cohesion, corruption, ethnic strife, widespread militarism, large numbers of non-state actors under arms and the proliferation of light weapons and intra-state conflict.

The enduring nature of conflict, debt and underdevelopment in certain regions of the developing world can trace their origins to the Cold War. At the height of bi-polar confrontation in the 1970s and 1980s a number of the world’s poorest regions, such as Central America, the Horn of Africa, Southern Africa and Indo-China, were drawn into the superpowers’ wars of proxy. The escalation of localised conflicts through superpower intervention led to rapid regional militarisation, reflected in high levels of military expenditures and conventional weapons’ proliferation. According to World Bank figures, in 1985 Nicaragua allocated 26.2% of government spending to military expenditures, Mozambique spent 38%, El Salvador 29.1%, Ethiopia 28.9%, Iran 34.1%. In most of these cases arms purchases were a significant factor in placing upward pressure on military expenditure budgets. With the end of the Cold War many of these conflicts have been resolved, but the debt of war remains as a debilitating factor inhibiting sustainable development and the ability of these countries to establish a durable stability.

  Military Expenditure, Debt and Development [top]

In most developing countries government revenues are insufficiently elastic to be able to accommodate rising military expenditures. In this situation a government has three options; it can reallocate expenditures from other government expenditure headings such as health and education; it can borrow foreign exchange in the international financial markets; or it could do a combination of these. In all three situations there is an opportunity cost in terms of development.

Opportunity costs can be defined as the benefits foregone by selecting one option at the expense of another or several others. In a world where resources are scarce, choice implies sacrificing something. The benefit that could have been derived from the alternative, not chosen, is the opportunity cost of the option actually selected.⁶

The UNDP has for some time utilised opportunity cost analysis in an attempt to understand the effect of military expenditures on sustainable development. In its Human Development Report 1994 it argued that the allocation of scarce national resources to military expenditures had incurred a huge loss of potential spending on human development,⁷ observing that ‘some of the poorest African countries now spend more on defence than they do on their populations’ education and health.’

Military expenditure influences growth and development in a number of direct and indirect ways.⁸ By redirecting government expenditures away from education and health it has an indirect effect on human capital formation. Excessive military expenditure affects the balance of payments situation and levels of infrastructural investment, while large purchases of military equipment from foreign suppliers can distort the balance of trade situation.

  Current Military Expenditure Trends in Developing Countries [top]

In general, measuring military expenditures in developing countries is difficult, and in some cases impossible, because of the general lack of transparency and accountability in government accounting procedures and the resistance of authoritarian regimes to revealing their military expenditure accounts. For instance in 1996 no African country reported its military expenditures to the UN under the Reporting Military Expenditures programme. The IMF’s latest audit of government finances, published in late 1997, gave 1996 figures on the military budgets of only Burundi, Madagascar, Mauritius, Tunisia and Zambia.

Nevertheless, considerable effort has been made by organisations such as the International Institute for Strategic Studies (IISS) to provide some sort of statistical account of military expenditure trends within the developing world.⁹ According to the IISS Military Balance in 1997 Sub-Saharan African expenditure was $8.8bn, a slight increase over the 1996 level, and accounted for around 3.3% of regional GDP.¹⁰ In Southern Africa and East Africa military expenditure has been on the increase largely as a result of recent acquisitions of weapon systems. Botswana’s 1998 security budget was $323m, accounting for 11.5% of government expenditure. The armed forces accounted for about two thirds of the budget, with the rest being allocated to policing expenditure. Namibia’s 1998 military budget was N$443m ($89m), up from N$416m in 1997. Botswana and Namibia are involved in a border dispute over Kasikili-Sedudu and Sintungu islands in the Caprivi strip of the Linyanti-Chobe river, so their recent arms acquisitions have raised concern within the region.

The Angolan government had an estimated budget of $380m in 1998, about 10% of government spending, although final outlays will probably be higher due to the continuing conflict with UNITA. Military and police spending in Mozambique continues to decline, although it still consumes 19.4% of government expenditure, down from about 38% of government expenditure during the height of the war in the 1980s.¹¹ Zimbabwe’s military expenditure of $456m in 1997/98 dramatically increased because of a one-off disbursement of $210m to war veterans, and is certain to increase because of its involvement in the Congo conflict.

Within the Southern African region, South Africa’s military expenditure and budgets, at around R11bn ($1.9bn) for each of the years 1996 to 1999, dwarfs all other military budgets. Current plans to purchase $4.8bn worth of military equipment will reinforce its overwhelming balance of military power within the region and contribute to neighbouring countries’ growing concerns over South Africa’s hegemonic intentions.

In East Africa, military expenditure continues to grow in Uganda, which is engaged in war with the Democratic Republic of Congo and is contending with guerrilla insurgency operations in the north of the country. The 1998 budget was $153m, 26% higher than in 1997. In Tanzania the combined military and police budget of $311m accounted for 23% of the government budget. In Sudan, where civil war wages on relentlessly, the military budget is thought to account for 80% of government expenditure.

In addition to the formal military expenditures, there is a high degree of off-budget funding of military activity in many sub-Saharan African countries, most notably in the procurement of military equipment and the funding and expenditures of armed opposition groups and mercenaries.

In the Middle East and North Africa, regional military expenditures increased between 1996-1997 by some 5% in real terms despite declining oil revenues.¹² At an average of 7%-8% of GDP, the region continues to spend significantly more than any other region of the developing world. Countries increasing their military expenditure include Algeria, which is engaged in a vicious civil war, Iran, where rising expenditure is covering a number of expensively produced indigenous weapon systems and Saudi Arabia, UAE and Qatar, which are all involved in importing expensive state of the art weapon systems. Israel has a military budget of $7bn, accounting for between 10%-12% of GDP, and is a major market for US weapon systems. The region remains the largest and most lucrative arms market in the world for sales of advanced weapon systems. Regional arms deliveries in 1997 were estimated at $17bn.

Military spending in Central and South Asia showed a growth of 3% in real terms in 1997, from $18.7bn in 1996 to $19.2bn in 1997. India and Pakistan account for over 80% of regional military expenditures. Military expenditure as a proportion of GDP was around 5% in 1997, higher than anywhere else except the Middle East.

In East Asia and Australasia military expenditures have been significantly affected by the financial crisis and fell by about 5% in real terms in 1997, from $149bn in 1996 to $142bn in 1997 (1997 prices). The depreciation of East Asian currencies against the dollar increased the cost of foreign imports forcing some countries to cancel orders for expensive weapon systems.

High levels of state and non-state military expenditure and the purchase of arms have done little to enhance the security of the majority of citizens in the developing world. Since 1945 more than 20 million people have died in wars and internal conflicts, a large proportion of these in the developing world. The UNDP maintains that ‘countries spending very little on defence and much more on human development have been much more successful at defending their national sovereignty than those spending heavily on arms’.¹³ By way of illustration it compares the relatively peaceful experiences of Botswana, Costa Rica and Mauritius with the conflicts afflicting Iraq, Myanmar and Somalia.

  Arms Sales [top]

The reliability of data on arms sales to the world’s poorest countries is even less conclusive than the information on military expenditures. Since 1994, statistical records of most government to government transfers of major conventional weapons are recorded by the UN Register of Conventional Arms Transfers. Of the 44 countries in Sub-Saharan Africa only Ethiopia, Mauritius, Namibia, Seychelles, South Africa and Tanzania reported their arms transfers, military holdings and domestic procurement to the UN Register on Conventional Arms in 1997.

The figures below on the regional distribution of arms transfers to the developing world produced by the IISS should only be taken as trend indicators as much of the data available only provides a partial picture of the actual scale of transfers.

Table: Regional Distribution of International Arms Transfers 1987 and 1997
 

	1987		1997
	($m)	% of world market	($m)	% of world market
Middle East/& N. Africa	33,232	37.5	15,629	33.7
East Asia	10,531	11.9	14,693	31.7
South Asia	6,534	7.4	1,669	3.6
Latin America	5,319	6.0	1,982	4.3
Sub-Saharan Africa	6,791	7.7	991	2.1

Source: IISS Military Balance 1999

Arms sales to Sub-Saharan Africa are particularly difficult to quantify as the majority of transfers go unreported, particularly as the categories of light weapons and ammunition, which constitute a significant proportion of arms procurement in the region, are not currently included in any of the existing data bases on arms transfers. Light weapons and ammunition are supplied by local industries as well as by international suppliers, but more significantly there is a large trade in recycled weaponry from past conflicts for personal use, as well as for use by statutory and non-statutory forces. This latter form of trade is particularly hard to track and thus to quantify. Under these conditions it is very difficult, if not impossible, to measure in any statistical way the scale of transfers into conflict zones in the developing world.

The main sources of supply for conventional arms are from a handful of industrialised states which comprise the Permanent Members of the UN Security Council - the US, France, UK, Russia, China. In addition there are a number of newly industrialising countries such as Israel, Brazil and South Africa which have become recent entrants into the international arms market. Since the end of the Cold War, a huge second hand market in weapon systems has also emerged with large supplies coming from former Warsaw Pact countries. Developing countries continue to be the primary focus of foreign arms sales activity by the major weapons suppliers. According to Grimmett, during the years 1989-1996 the value of arms transfer agreements with developing nations comprised on average 67.5% of all such agreements worldwide.¹⁴ The value of all arms transfer agreements with developing nations in 1996 was some $19.4bn, which represented the first increase in arms sales since 1992. In 1996 the United States was the biggest exporter, having sales agreements worth $11.3bn, the UK with agreements worth $4.8 was in second place, and Russia with sales agreements worth $4.6bn ranked third.

The influence wielded by military industrial elites of the supplier states and their drive to export, created by the need to maintain employment in domestic military industries and generate returns from large outlays incurred on domestic weapons procurement projects, ensures that certain violent and repressive regimes such as Indonesia, Nigeria and Pakistan have been able to acquire weapons with relative ease. In part, these patterns of transfers derive from patronage relations established during the Cold War which have endured despite expectations of a new and positive world order.

Patronage not withstanding, a contradictory trend is discernible amongst those Northern states which support the principles of conflict prevention, development and good governance, yet place little if any unilateral restraint on the export of arms to developing countries. There are some signs that measures are being taken to rectify this anomaly in the international community’s dealings with post-conflict and conflict-prone societies. The recent adoption of a ‘security first’ approach, for instance, is based on the notion that security should no longer be considered discrete and unrelated to other spheres of foreign policy, but should instead form part of an integrated approach by donors.

One cannot conceive of an effective conflict prevention policy that does not tackle the problem of arms supplies. At present no multilateral system for controlling sources of supply of major weapons systems exists, as there is for nuclear, chemical, biological and intercontinental ballistic missiles. Even less control exists for light weapons which have caused most of the casualties in war in the developing world since the end of the Cold War. Nevertheless there are a number of initiatives that are likely to come to fruition in the next few years that may rectify this hiatus.

Spurred on by the success of the global campaign to outlaw anti-personnel mines which resulted in the signing of the Ottawa Treaty in December 1997 by more than 120 states, a number of interesting initiatives have been advanced with a view to controlling the flow of light weapons. Support has been gaining momentum for a convention on the prevention of the illegal use of light weapons, aimed principally at establishing strict criteria to govern the export, collection and destruction of surplus armaments and at promoting more transparent international co-operation.¹⁵ In this spirit the UN Panel of Governmental Experts on Small Arms has recommended a number of practical measures to reduce the quantity of weapons in circulation and to curb future acquisitions of small arms, including establishing a regional information-sharing network: providing assistance for democratic internal security forces and assisting post-conflict initiatives related to disarming and demobilising regular and irregular forces.¹⁶

In May 1998, a UK-government-sponsored conference entitled ‘Developing Controls on Arms and Illicit Trafficking in Southern Africa’ examined ways of developing a regional action plan for Southern Africa, aimed at controlling light weapons proliferation and diffusion. The programme is to be supported by the European Union (EU). Other initiatives by the EU, including the establishment in 1997 of its Programme for preventing and combating illicit trafficking in conventional arms and the adoption of an EU Code of Conduct in June 1998, are a step in the right direction. But it is important to recognise that current initiatives remain inadequately developed and in need of sufficient resources and greater co-ordination at regional and international levels. In the coming decade the challenge will be to enhance and empower these initiatives so that they become the foundations of a new multilateral arms control regime.

  Debt and Conflict [top]

Sub-Saharan Africa may only account for a small share of the global arms market but nowhere else is the relationship between debt, development and the arms trade so stark. The profligate policies of military regimes and the widespread proliferation of conflict on the continent have contributed to a high incidence of HIPCs on the continent. In fact 31 of a total of 41 HIPCs are located on the African continent.

Moreover, of the countries identified by the World Bank as HIPCs¹⁷ over half are involved in, or have recently emerged from, conflict situations. Those countries currently engaged in either interstate or intra-state conflicts include Angola, Central African Republic, Chad, Republic of Congo-Brazzaville, Democratic Republic of Congo, Ethiopia, Guinea-Bissau, Guinea, Liberia, Sierra Leone, Senegal, Somalia, Sudan and Uganda. Note that all of the above are located in sub-Saharan Africa.

Five countries - Burundi, Mozambique, Nicaragua, Rwanda, and Yemen - are undergoing the fragile process of transition from war to peace, while Vietnam and Lao are still suffering from the effects of conflict which ended over 20 years ago, not least because of the large presence of mines, which affects agricultural production and the return of displaced peoples. Other severely indebted countries such as Nigeria, Kenya and Myanmar are experiencing serious internal instability. In other words, 23 of the 41 HIPC countries, that is over half of the world’s poorest, most indebted countries are, or have recently experienced conflict.

Many HIPCs are currently ruled, or have been ruled in the recent past, by highly militarised, authoritarian regimes. These include Bolivia, Central African Republic, Chad, Democratic Republic of Congo (formerly Zaire), Kenya, Liberia, Mali, Myanmar, Uganda and Zambia. A report produced by Jubilee 2000, entitled Dictators and Debt, has drawn attention to the fact that one fifth of all developing country debt consists of loans that were given to compliant dictators.¹⁸

  The Cost of Conflict [top]

The cost of conflict to development has been systematically analysed in recent years.¹⁹ The economic consequences of war are multiple and complex. They can be divided into immediate human costs and the longer-term development costs. This division is somewhat artificial because human costs such as the deterioration in nutrition and education, the loss of life and depletion of skills constitute development costs, while developmental costs such as destroyed infrastructure and negative growth are among the causes of human suffering and deprivation.

In Southern Africa the sustained costs incurred through the destabilisation campaign waged by apartheid South Africa on its neighbouring states has been estimated to total $115bn.²⁰ With the end of the Cold War the Southern African region has witnessed the withdrawal of superpower intervention, the end of apartheid, the termination of conflict in Namibia and Mozambique, a thirty percent decline in regional military expenditure and the demobilisation of tens of thousands of soldiers. However, the debts and cost of destruction that accumulated during the Cold War will remain a burden for generations to come. Children not yet born will have to pay the price of debt for wars they did not fight, for ideas they do not hold, for a regional and global system that no longer exists and for decisions made by regional and world leaders no longer in power.

Conflict contributes to debt, but by the same token unsustainable debt poses an ongoing and insidious threat to the well-being and security of millions of people in the developing world. Scarce national resources are siphoned away from poverty alleviation to service debt, enriching the creditors of the affluent Western world. At least 20 of the most heavily indebted poor countries (HIPCs) transfer more than one-fifth of their revenues to creditors in the developed world.

In 1995 Africa’s external debt amounted to $328bn of which approximately 45% was owed to official bilateral sources, 30% to official multilateral sources, and 25% to commercial lenders. In order to service this debt fully, African countries paid Western governments and external commercial lenders more than 60% ($86.3bn) of the $142.3bn in revenues generated from their exports. In fact, African countries paid more than 17% ($25.4bn) of their total export earnings to these creditors, but this still left a total of $60.9bn in unpaid arrears.²¹

  HIPC Debt Initiative [top]

In recognition of the unsustainability of the accumulated debt burden of many poor countries, the World Bank and IMF launched the HIPC Debt Initiative in 1996, which gave some hope to developing countries that they might get some relief from their debt burdens. The identified heavily indebted poor countries include those countries which are unable to generate sufficient foreign exchange through the export of commodities to be able to pay the interest on their loans.

The main aim of the World Bank’s Debt Initiative for the HIPCs is to bring a country’s debt burden to sustainable levels in terms of debt to export earnings ratios, subject to satisfactory policy performance, so as to ensure that adjustment and reform efforts are not put at risk by continued high debt and debt service burdens.²²

So far the Debt Initiative has proved disappointing. Of the 41 countries identified as HIPCs, so far only three countries have received debt relief, Uganda, Bolivia and Guyana. In all three countries debt relief has been subject to meeting stringent conditionalities imposed by the IMF over a six year qualifying period. In development terms these countries have benefited very little from the initiative, as debt relief has proved to be far too little, far too late. In the case of Mozambique, for instance, which qualifies for debt relief later this year, it will save only $11m on a total debt service bill of more than $108m. Debt repayments will continue to absorb more budgetary resources than health and primary education combined. As Kevin Watkins of Oxfam’s Policy Unit has observed ‘Defining such a state of affairs as ‘debt sustainability’ as the framework does, is as absurd in economic terms as it is unacceptable in moral terms’.²³

Critics of the HIPC Debt Initiative argue that the terms and conditionalities that HIPCs are expected to meet are too stringent. According to Jubilee 2000, ratios for measuring debt unsustainability need to be lowered, made more realistic and brought into line with historical precedents.²⁴ Currently debt sustainability is measured solely in terms of debt-to-export ratios rather than in terms of budgetary burden. This reflects the IMF’s insistence on prioritising monetary targets over human development goals, contributing to reduced spending on health and education and creating unemployment and increased levels of household poverty in the process. In order to give some protection to poor countries’ development needs, Oxfam has argued for the introduction of a fiscal cap into the debt relief framework, limiting debt repayments to 10% of government revenues.

On a more progressive note, the IMF has introduced caps on military expenditure levels since the end of the Cold War - an initiative supported by the OECD (Organisation for Economic Cooperation and Development) that has argued for the reallocation of military savings to sustainable development goals.²⁵ But so far few savings from military budgets find their way into development priorities, as the IMF insists on redirecting them towards debt serving. This state of affairs makes a mockery of the IMF and World Bank’s publicly-acclaimed commitment to strengthen the linkages between debt relief, poverty reduction and conflict prevention.

Kevin Watkins of Oxfam’s Policy Unit argues that instead of insisting on compliance with IMF programmes, creditors should offer pro-poor incentives for countries willing to transfer savings from debt relief into schools, clinics and water supplies that will make a qualitative difference to poor peoples’ lives.²⁶ The benefits of converting debt liabilities into investment for poverty reduction are enormous. Not only would it create a platform for social and economic recovery but it would create the conditions for greater social and political stability.

  Odious Debt [top]

The heavily indebted poor countries must accept some of the responsibility for their present debt situation, but as UN Secretary General Kofi Annan has argued ‘the international community needs to acknowledge its own role in creating this problem. During the Cold War bilateral and multilateral loans were often linked mainly to geopolitical priorities, purchasing political peace and stability in areas of interest to the super-powers or their principal allies. In many cases bilateral loans provided funds for extensive military expenditures by African countries. Across Africa, governments were sometimes pressurised into accepting a wide range of loans which they did not need and could not productively utilise. In many cases little or no effort was made to ensure accountability for expenditures, despite clear reasons for lenders to expect that substantial sums were likely to be diverted or misappropriated.’²⁷

Since the end of the Cold War many former dictators have been removed from power and replaced with democratically-elected governments. The tragedy of this otherwise welcome development is that the democratically-elected successors are expected to repay those debts. As the Jubilee 2000 report points out, the lenders and not the borrowers should be responsible for the loans to dictators. There are two compelling reasons why these debts should be forgiven:

• First they are ‘odious debts’ as defined in international law, and cannot be the responsibility of those who did not incur them and who suffered as a result of those loans.²⁸
• Second, there is the issue of ‘moral hazard’. By forcing repayment of these loans, the international community signals an acceptance of lending to corrupt and oppressive dictators. If lending is to embody a level of integrity compliant with universal norms then creditors must accept that such lending is morally unacceptable and economically unsound.²⁹

All too often the international financial community links the issue of ‘moral hazard’ to debtor irresponsibility rather than accepting its own share of responsibility for the build up of odious debt. Currently, the IMF acting as a lender of last resort provides a safety net for lenders against the high risks of lending to authoritarian and corrupt regimes. This is the ultimate form of ‘moral hazard’ and one that has come under close scrutiny since the advent of the East Asian financial crisis that has caused so much suffering and instability throughout East Asia, but most particularly in Indonesia. Only if lenders are forced to take the full risks of their loans will the uneconomic nature of odious loans be made apparent.

A classic case of odious debt and moral hazard is that of the debts of apartheid. The apartheid regime is recognised throughout the world to have denied basic human rights and to have used its security forces for internal repression and external wars with neighbouring states in Southern Africa. During the 1980s its external debt accumulated as the society became increasingly militarised. At the height of militarisation, South Africa officially spent 5% of GDP on military expenditure. This did not include sizeable hidden expenditures on its expensive nuclear weapons programme and its chemical and biological warfare projects. Since the end of the apartheid regime, South Africa has been at peace with its neighbours, and its military expenditure has been cut by over 50% since 1989, yet the debts incurred by the apartheid war machine continue to undermine the alleviation of poverty in the new South Africa.

The archbishop of Cape Town, Njongonkulu Ndungane, has made a strong case for writing off the odious debts of the apartheid era, ‘as we approach the new millennium, the time has come to invoke the Doctrine of Odious debt. In the case of South Africa, its foreign and domestic debt was incurred, by and large under the apartheid regime, and should be declared odious and written off.’

  Post-Conflict Societies and Debt [top]

At the best of times, meeting the challenge of IMF and World Bank economic reform and structural adjustment - a precondition for debt relief - is onerous, but for those countries emerging from conflict it is nigh on impossible. Kofi Annan has argued that ‘where a country’s capacity to develop and implement a comprehensive programme has been disrupted by conflict, consideration must be given to relaxing the normally strict financial conditions imposed by international lending institutions. Conflict prevention, including post-conflict peace-building, may require an urgent infusion of funds to support a fragile state during a delicate political transition. It is particularly necessary to avoid situations in which conditionalities are imposed that are antithetical to a peace process, or in which international financial institutions and the donor community cut off funds from a weak government making, in good faith, a popularly-supported effort to pursue reconciliation or implement peace agreements. Where economic reform is needed it is necessary to consider how best to provide for a peace-friendly structural adjustment programme while easing the conditionality that normally accompanies multilateral loans.’³⁰

Post-war countries are faced with the immense task of (re)integrating into the global world economy. Peace being settled, they have to strive to become gradually able to compete effectively in world markets and promote their interests in the economic and trading system. This is more arduous now than it was decades ago, as the process of world-wide liberalisation and technological progress has accelerated. While many war-torn societies have fallen prey to the internationalisation of criminal and purely speculative activities, they are in a much more difficult situation to seize potential benefits from the current global economic context, commonly referred to as ‘globalisation’.

There is a strong case for debt forgiveness in post-conflict societies to be linked to an insistence on fundamental political change, i.e. a transition from authoritarian military rule to democratic pluralism. In this vein Boyce and Pastor suggest that external actors must formulate appropriate conditionalities if aid is to support the peace process and attract or ‘crowd in’ domestic resources for peace-related requirements.³¹ They argue that in cases such as El Salvador, the international community failed to exert effective peace conditionality but pressed forcefully for macroeconomic reforms. In so doing the international financial institutions weakened the consolidation of peace by being both too rigorous on public expenditure reduction and not rigorous enough on the reallocation of domestic resources from military to the new democratic institutions. For these authors, the reinforcement of power sharing and democracy is a priority in the wake of a negotiated settlement to a civil war.

There is also a strong case for some sort of Marshall Plan approach to economic reconstruction in post-conflict societies, particularly where foreign intervention was responsible for the escalation of militarism and conflict within a region.

Section II: UK Policy Towards the Arms Trade, Debt and Development [top]

As a leading OECD economy with a strong presence in the UN Security Council, the G8, the Paris Club and the EU, the UK government is highly influential in setting the international climate on issues concerning debt, development and the arms trade. Although there have been many progressive reforms in certain aspects of the UK’s foreign policies towards the developing world, as this section attempts to show, there is a lack of coherence in the Labour government’s current policies towards debt, development and the arms trade.

  Development Policy [top]

In November 1997 the Department for International Development (DfID) published the first White Paper on Development to be produced by a UK government for 22 years. The White Paper defined DfID’s central mission to support the internationally agreed target to halve the proportion of the world’s population living in abject poverty by the year 2015.

To achieve this goal, DfID quickly realised that it would have to address one of the major obstacles to development, namely conflict and the highly militarised regimes that dominate many of the world’s poorest countries. The DfID Departmental Report 1999 states that ‘A major obstacle to the eradication of poverty is the persistence of violent conflict, or its legacy, in many of the poorest countries. Reducing the incidence, duration and effect of armed conflict is essential. DfID’s policy for conflict reduction seeks to strengthen political and social systems to enable disputes and grievances to be resolved without recourse to violence.’³²

As part of this programme DfID has identified security sector reform as a priority for its development agenda.³³ Given the controversial policies of the ODA (DfID’s former incarnation) in supplying aid to sweeten arms trade deals, Clare Short, the Secretary of State for International Development, has been emphatic that no UK development assistance should be used to reinforce the role of the military or support arms sales, ‘There is obviously no question …of development resources being used to strengthen the aggressive capability of military forces or being linked to arms sales. Our interest is in helping to secure a security sector of appropriate scale that is properly accountable to democratic, civilian authorities.’³⁴ A central objective of security sector reform is to reallocate military resources to social need. In the words of Clare Short ‘In too many countries, a bloated security sector soaks up resources that would be better used elsewhere. And resources spent on excessive procurement and perks for the military mean the denial of essential public services for the poor.’³⁵

In pursuit of these objectives Clare Short has emphasised the importance of co-ordinating DfID’s efforts with other government programmes such as the Foreign and Commonwealth Office programme of Assistance to Support Stability with In-Service Training (ASSIST) and the Ministry of Defence’s (MoD’s) Defence Diplomacy Programme. She stressed that ‘Co-operation is essential in this area of policy, as in others such as trade or debt, to ensure that our Government’s influence is used coherently in international affairs.’³⁶ A problem that DfID is likely to encounter, however, is that the coherence in international affairs so necessary to the success of security sector reform simply does not exist between or even within Whitehall departments.

  The UK Government and its Debtors [top]

The UK government has been at the forefront of arguing the need for reform of the HIPC Initiative, and it has initiated debt cancellation in a number of cases on a bilateral basis. Yet the UK government has a track record of providing financial support to facilitate arms sales to unsavoury regimes, and as yet this pattern does not appear to have been altered.

More than one third of all debt owed to the UK government is owed by Nigeria, which amounts to £3bn. Loans were extended to Nigeria while it was under a military dictatorship. Sudan, which is fraught with conflict, is the UK’s fourth largest debtor owing £382m. The military regime in Algeria owes the UK £166m which was lent by the UK after the results of the democratic election were annulled. The Democratic Republic of Congo with its history of authoritarianism, human rights violations, corruption and cronyism owes £134m to the UK government.

A large percentage of UK bilateral debts have been incurred through the Export Credits Guarantee Department (ECGD). The ECGD is an independent department under the responsibility of the Secretary of State for Trade and Industry. Its main function is to promote UK exports abroad by guaranteeing payment to UK exporters in the case of a default by foreign customers. It takes on risk that the private sector is not prepared to accept. For the exporter this is an insurance policy. If an importing country does not pay, then the ECGD pays the supplier. A significant percentage of ECGD credit is made available to underwrite UK arms exporters. Between 1994-97, 20% of UK export credits were allocated to cover arms sales.

Many of the existing loans to unsavoury dictators were made under the former Conservative administration whose foreign policy practices came under considerable public scrutiny towards the end of its term. On taking power Robin Cook, the Secretary of State for Foreign Affairs, announced a new mission statement for the Foreign and Commonwealth Office which stated that ‘Our foreign policy must have an ethical dimension and must support the demands of other peoples for the democratic rights on which we insist for ourselves. The Labour Government will put human rights at the heart of our foreign policy’.³⁷ Many areas of foreign policy are undergoing a process of reform to reflect this new ethical commitment, but in the area of the ECGD continuity rather than change appears to characterise current practices.

Some of the most controversial ECGD decisions to have been made under the Labour government are those to cover recent arms sales to the incumbent Indonesian regime, currently facing financial crisis. There are of course strong moral and ethical issues for not exporting arms to Indonesia, which have been elaborated elsewhere. But there are also strong reasons to question the sagacity of the Labour government’s decision not to withdraw ECGD cover to Indonesia given the endemic corruption within the former Suharto regime and the Golkar Party which remains in power. A recent World Bank internal document revealed the corruption which resulted in the embezzlement of vast loans meant for Indonesian development since 1997. One third of the loans worth $24bn, intended for infrastructure projects, disappeared into the pockets of the Suharto regime.³⁸ By extending cover to the current regime the UK government confers a high degree of legitimacy on a regime with a track record of heavy-handed militarism, corruption and human rights abuse, and which does not conform to DfID’s policies on conflict resolution, humanitarian assistance and development.

  UK Arms Trade Policy [top]

Nowhere is the contradiction between the UK government’s development goals and foreign policy objectives more at odds than in its arms trade policy. In July 1997 Robin Cook committed the FCO to a ‘responsible’ arms trade policy.³⁹ He pledged to introduce tougher restrictions on arms exports and to play a constructive and leading role in pressing for a European Code of Conduct on arms exports.

In theory at least, the Labour government has committed itself to restricting the sale of weapons to regimes that might use them for internal repression or external aggression, and is attempting to increase accountability and transparency in decisions on export licences. In addition the government has undertaken to reform existing legislation on strategic export controls and was instrumental in setting up the EU Code of Conduct which includes a set of eight Common Criteria for Arms Exports that EU governments must take into consideration. One of these is ‘the respect of human rights in the country of final destination’.

Complementing the Foreign Office’s ‘ethical policy’ on the arms trade, DfID has adopted a policy which links the arms trade to development. In its 1999 Departmental Report it has categorically recognised the relationship between arms supplies and conflict: ‘The supply of weapons, particularly small arms, continues to fan the flames of conflict. In parallel with the FCO’s work on developing a Code of Conduct for Arms Exports, we have tried to help developing countries and regions deal with the problem of illicit trafficking. We have supported seminars in central and Southern Africa to agree measures for tackling arms proliferation’.⁴⁰

In reality, however, the improvements in the government’s unilateral and multilateral approaches to arms control appear to have done little to stem the flow of weapons systems to developing countries. According to IISS estimates, the arms trade grew by some 12% in 1997, bringing real growth between 1995 and 1997 to some 36%. In 1994 the UK exported $5bn worth of arms, by 1997 this had increased to $8bn. This contrasts with the general decline in arms export values that were sustained from 1987 to the early 1990s. The UK was the second largest exporter of arms in 1997, accounting for 18.5% of the global market and has in no small way contributed to the growth in arms deliveries particularly to the developing world.

The surge in arms exports reflects deliveries to the Gulf States - particularly Saudi Arabia’s $11bn military imports which included the delivery of 36 Tornados and 20 Hawk trainer aircraft built by British Aerospace. Arms deliveries to East Asia also peaked in 1997. Whether primarily pursuing geostrategic interests or propelled by the profit motive, as a supplier state the UK has indirectly supported highly militarised regimes such as the Suharto regime in Indonesia, the Saudi family in Saudi Arabia, the military dictatorship in Nigeria. All these countries have been condemned for human rights abuses by Human Rights Watch and Amnesty International.

Apart from conferring a high degree of political legitimisation to these repressive regimes, UK arms sales encourage regimes to spend scarce national resources on weapon systems rather than on development objectives. In this way arms sales promoted by the Defence Export Services Organisation of the MoD undermine the development objectives of DfID. Detailed illustration of the contradiction in the government’s policy towards arms transfers, debt and development are to be found in their policies towards to Sierra Leone, Kenya, Indonesia and South Africa.

Section III: Case Studies [top]

The four case studies that have been chosen have been selected to reflect a broad spectrum of developing countries facing diverse debt, development and security challenges. They are all countries that the UK has recently transferred arms to. In the case of Sierra Leone, a poor war-torn society with HIPC status, the UK government has been implicated in supporting the illicit transfer of small arms, in the case of Kenya, also a HIPC economy, the UK has recently exported riot control equipment. In both these cases, weapons transfers are relatively small in terms of value, but have significant political and development implications. In the cases of Indonesia and South Africa the weapons being transferred are major weapon systems and the values are much more significant. These two countries are more highly developed than the first two, but face severe debt, development and internal security problems. The differing individual experiences of each country reflect the complex interaction of development, debt and arms transfers.

  Sierra Leone [top]

Sierra Leone is a small highly indebted, impoverished and war torn West Africa state with a population of 4.7 million. In 1997 the World Bank estimated that it had a GDP of only $0.76bn and a total debt to GDP ratio of 164.6%. The World Bank recognises Sierra Leone as a heavily indebted poor country.

The civil war in Sierra Leone began in 1991 when the Revolutionary Unified Front (RUF), supported by Liberia, overthrew the then President and imposed military rule in 1992. Following considerable international pressure to reinstate democracy, elections were held on March 29th 1996 which gave the Sierra Leone Peoples Party (SLPP) headed by Ahmad Tejan Kabbah, 60% of the popular vote.

The principal rebel group (RUF) signed a peace agreement with the new government, but in May 1997 the RUF backed a military coup led by Major General Paul Koroma. President Kabbah fled to Conakry in Guinea. The international community was determined to dislodge the illegal junta from power. To this end neighbouring African states and the United Nations imposed sanctions including an embargo on the supply of arms and military related equipment. The UN arms embargo required Member States to ‘prohibit the supply of arms to any person or legal entity, for the purpose of any business carried out in or operated from the Republic of Sierra Leone, or any activities by their nationals or in their territories which promote or are calculated to promote such sale or supply’.

In 1993 the Economic Community of West African States (ECOWAS) had sent a mainly Nigerian force known as ECOMOG to help suppress the rebels. Nigerian troops were still in the country when, in February 1998, after a week of intense fighting, they recaptured the capital Freetown from the junta. The return of President Kabbah did not bring the violence to an end, however. The RUF nearly captured Freetown in December 1998 and still control more than half the country. Horrific violations of human rights have been committed by both sides in this destructive and persistent war.

Economic Performance and Development [top]

Sierra Leone is a desperately poor country. In 1996 its gross national product (GNP) per capita was $200 and male life expectancy was 37 years. Since then the economy has deteriorated dramatically because of the effect of the war. According to World Bank figures GDP growth declined by 21.1% in 1997 and per capita income declined by 23.1%.⁴¹ A quick glance at the figures below will reveal a process of dramatic decline in exports, a depletion of national savings and growing current account deficit and a dramatic increase in debt since the 1970s.

Table: Sierra Leone Economic and Social Indicators

These somewhat depressing indicators of poverty and economic decline disguise the fact that Sierra Leone is one of the world’s principal diamond producers. The diamond mines have attracted many foreigners with an eye to quick profits, and they are at the root of the internal struggle for power.⁴² The diamond trade has also attracted a considerable mercenary presence in the country who insist on payment in lucrative mining concessions.

Since the fighting resumed in 1997, the economic situation has deteriorated as civil war has wreaked destruction and chaos across the country. The social disruption and the economic costs of war have been enormous. The conflict has claimed the lives of an estimated 10,000 citizens, over two million people have been internally displaced and a further 450,000 are refugees in neighbouring countries. Substantial damage has been caused to the productive sectors, in particular agriculture and mining, thereby greatly reducing the government’s revenue earning capacity. Significant infrastructure has been destroyed or has deteriorated due to the lack of maintenance, and the delivery of basic social services has largely ceased.

The violence and destruction in Sierra Leone during 1998-99 has been relentless. According to a report released from Refugee International in March 1999, between 65% to 85% of the capital, Freetown, has been destroyed. More than half the internally displaced are cut off from international assistance because of the fighting.

By April 1999 the humanitarian crisis in Sierra Leone was catastrophic, at least equal to the humanitarian crisis in Kosovo. In April 1999 The World Food Programme warned of an imminent food crisis and of insufficient medical aid even to treat the ever growing number of amputees. Apart from the internally displaced there are some 95,000 refugees in neighbouring Liberia and approximately 350,000 Sierra Leonean refugees in Guinea. Refugees fleeing into Guinea have not necessarily found sanctuary from rebel violence - in March rebel troops raided the Guinean town of Pamelap where 5,000 refugees had fled.

UK Policy Towards Sierra Leone [top]

Sierra Leone has been an independent member of the British Commonwealth since 1961 and has long standing links with the UK. The UK government contributed £2m to fund the election which put President Kabbah in office. Since then the UK has provided bilateral aid to support projects that nurture democracy and the rule of law and that provide humanitarian aid to the poor.

After the military coup in 1997 the UK government announced that their policy was to support the peaceful restoration of President Kabbah’s democratically elected government. However, as the Legg report has revealed the UK government played a highly controversial and clandestine role in the Sierra Leonean crisis.⁴³

The Legg report found that certain Foreign Office officials actively supported the role of the mercenary organisation, Sandline, in overthrowing the military junta. Sandline, who describe themselves as ‘military consultants’, were reported to have bought £6m worth of arms in Bulgaria to supply Mr Kabbah’s forces in a counter-coup in 1998, with the implicit blessing of the UK government.⁴⁴ The arms supplied by Sandline were destined for the Kamajors, a tribal militia who are among Mr Kabbah’s most loyal supporters and sworn enemies of the RUF. In the event, the military action planned by Sandline in collusion with the Kamajors was pre-empted by the military intervention of the ECOMOG forces. Sandline’s arms purchases were conducted in the full knowledge of certain Foreign Office officials and the High Commissioner of Sierra Leone, Mr Penfold. The Legg report found that no Ministers gave encouragement or approval to Sandline’s plans to ship arms to Sierra Leone.⁴⁵

In its defence, the Labour government argued that it took the moral high ground in the crisis in Sierra Leone by helping to re-establishing the rightful and democratically-elected government, but many ambiguities remain about the UK’s role in the crisis. Following the findings of the Legg Inquiry, public debate on the UK’s role in Sierra Leone focused mainly on legal and procedural matters – i.e. to what extent did UK officials collude in the breach of a UN embargo.⁴⁶ In terms of reform, focus has been placed on the banning of arms brokerage. While this is a welcome development for those concerned with stemming the supply of light weapons, insufficient attention has been given to the more substantial issue about the willingness to engage and arm irregular forces and what this means for long-term political stability and sustainable development.⁴⁷

Meddling in the affairs of another country through clandestine means sets a dubious and problematic precedent, particularly when the supply of illegal arms are involved and where military operations are sub-contracted to mercenary groups. Recent African history, such as the war in Angola, shows us that the use of mercenaries and the provision of arms encourages elites to seek military rather than diplomatic or political solutions to conflict resolution. It reinforces a winner takes all approach to political power which is at the root of the problems of income inequality and corruption in Africa.⁴⁸ There are few, if any, cases where mercenaries have been used and conflict has been resolved. Yet the influence of mercenary groups on conflict and development is harmful and expanding. National resources such as diamond and other mining concessions handed over to mercenary groups in exchange for their services represents a loss of development potential and a loss of control over national resources. Such rich rewards provide little if any incentive to mercenary groups to bring conflict to a close. In many cases, the relationship between mercenary groups and military and political elites is corrupt and the clandestine nature of their operations undermines the principle of transparency and accountability in security sector activity.

Finally, as mentioned by Tony Lloyd (UK Foreign Minister), dealing with mercenaries can have an adverse impact on the implementation of the government’s foreign policy objectives and its standing in international circles.⁴⁹ This observation also applies to support for the clandestine supply of arms. For example in an article in Sierra Leone’s national newspaper The Progress, on the 9th April 1999, the UK’s role in the crisis and in particular the supply of arms to ECOMOG have been questioned, ‘We believe that providing more arms and ammunition to ECOMOG to fight the rebels will all go on to prolong what seems to be a seemingly unending nightmare. In fact providing more arms to ECOMOG may also mean indirectly providing arms to the rebels since the possibility for arms reaching the rebels is likely’⁵⁰. The article then goes on to cite an incident in which the RUF ambushed and captured a large consignment of arms destined for ECOMOG.

The article also raises the important question of the UK’s funding priorities in seeking to fund a solution to the civil war; ‘Britain like other members of the international community claim that they support the two-track approach forwarded by the government. Now if Britain is honest in her support for this approach, how many pounds has she donated towards solving the crisis peacefully rather than (through) the use of force’.⁵¹ So far UK actions far from improving the situation have, if anything, helped to escalate the conflict and the UK’s role in it. Meanwhile the victims of the conflict have been all but ignored by the international community.  

  Kenya [top]

Kenya was a British colony and protectorate from the 1890s until independence in December 1963. It is a member of the British Commonwealth and has enjoyed close relations with the UK since independence.

Jomo Kenyatta transformed Kenya into a de facto one party state centred on the Kenya Africa National Union (KANU) party which has dominated Kenyan politics ever since. The current President, Daniel Arap Moi, succeeded Kenyatta in 1973. In 1992, under international pressure, more parties were allowed to form and take part in national elections. Nevertheless KANU sustained election victories in 1992 and 1997 amidst considerable controversy about election rigging and localised violence. 

Economic Performance and Development [top]

In 1997 Kenya had a population of 28 million and a GDP of $10.2bn. GNP per capita is $330 per annum. Kenya has a relatively diversified economy but most employment is dependent on agriculture which contributes 29% of GDP. Kenya enjoyed steady economic growth from independence until the late 1970s. The average GDP growth rate has declined from 6.5% in the 1970s to 2.2% in 1990-97, below the rate of population growth at 2.6%. The Kenyan economy was badly affected by the oil crises in 1973 and 1979. Following these external shocks Kenya began to descend into debt. Kenya’s foreign debt is high, amounting to 63.4% of GDP in 1997, although debt servicing, at 28% of foreign exchange receipts, is fairly low by Sub-Saharan standards. This is because a large proportion of Kenya’s debts are domestic debt. Interest payments on domestic debt are, however, a serious burden accounting for 25% of government revenues.

Table: Kenyan Social and Economic Indicators
 

Key Economic Indicators	1976	1986	1996	1997
GDP, $bn	3.5	7.2	9.2	10.2
Exports/GDP	32.5	25.8	32.9	29.2
Current account balance/GDP	-3.6	-6.6	-2.4	-3.3
Interest payments/GDP	1.5	2.6	2.6	1.8
Total debt/GDP	43.0	63.4	74.4	63.4
Total debt service/exports	14.8	36.1	28.0	19.7

Poverty and Social indicators, 1997
Population, millions	28
GNP per capita, $	330
Population growth, annual %	2.6
Poverty, % of pop below poverty line	42
Life expectancy at birth	58
Infant mortality per 1,000 live births	56
Child malnutrition, % children under 5	23
Illiteracy, % of population age 15+	22
Source: World Bank Development Data 1999

In the early 1980s, Kenya had distinctly more favourable social indicators than most countries in Sub-Saharan Africa. But, as the country’s economic performance began to deteriorate, sustained per capita income growth became an elusive goal. By the early 1990s social indicators began to show that gains made in poverty eradication were in reverse. In certain regions of the country child malnutrition is on the rise. Some 47% of the rural population remain in poverty and experience chronic food insecurity. Furthermore, the difference between the minimum required consumption and the actual consumption of the poor has increased and the distribution of consumption has worsened.

In the 1980s Kenya was among the major aid recipients in Africa, but the 1990s have witnessed a steady decline in development assistance, occasioned by a perception of poor governance and mismanagement of public resources and development assistance by the Moi regime.

Security [top]

By African standards Kenya is not a highly militarised state. In 1997, military expenditure amounted to $198m or 1.9% of GDP and remains lower than state expenditure on education. There are, however, some alarming trends within Kenya which should raise concerns for those concerned with conflict prevention.

The Moi regime, in conjunction with the Belgium company Fabrique Nationale Herstal, has built a £6m munitions factory which was completed in 1997. The factory is reputed to have supplied arms to Rwanda in violation of the UN arms embargo. This development has given rise to concerns about Kenya’s role in light weapons proliferation in the Great Lakes region. Moreover this investment has been made despite the fact that Kenya is experiencing a deteriorating economic situation.

Kenya is also facing a deteriorating internal security situation. There are for instance low intensity ethnic conflicts involving the Turkana and Samburu peoples in the north. Ethnic clashes in the early 1990s resulted in hundreds of dead and thousands being displaced. There are also reliable reports of widespread human rights violations committed by the police on behalf of the increasingly isolated and ruthless Moi regime. Political opposition to the Moi regime has been growing and during the 1997 general election there was violent political conflict in Mombasa.

Despite Kenya’s growing internal instability and the authoritarian nature of the Moi regime, the UK has exported military equipment to Kenya, albeit in small quantities by UK export standards. Between January 1992 and January 1998, 380 standard individual licences were issued for the export to end users in Kenya of goods described under the Export Control Organisation’s Military List, including licences for tear gas and plastic baton rounds.⁵² Since the Labour administration has come to power it has attempted to tighten restrictions in line with the criteria set out by the Foreign Secretary in July 1997. Under these criteria equipment that might be used for internal repression is restricted. In 1997 the government rejected applications for licences for riot control equipment worth an estimated £1.5m. In addition the government has removed Kenya from the coverage of several Open Individual Export Licences.⁵³

The Moi regime is unlikely to last long into the next century, yet there is no guarantee that there will be a smooth transition from a one party state to a functioning democracy. Even if democracy does assert itself, it will face a legacy of debt that will restrict the ability of the government to implement a sustainable development programme that will reverse the deteriorating social conditions and rising poverty. The failure to address poverty and the growing inequalities that have come to characterise the Kenyan economy in recent times will exacerbate the underlying tensions within Kenyan society. The early warning signs of impending conflict are visible to those that want to see. Now is the time to take action on debt and development assistance to prevent the sort of humanitarian crisis that has become all too common on the African continent. It is also time to remain vigilant on arms sales restrictions to Kenya to prevent the flow of arms which will only act to intensify the potential levels of conflict and human rights abuses.

  Indonesia [top]

Indonesia with a population of 200 million is the fourth largest country in the world. It is a middle-income developing country with a GNP per capita income of $1,080 in 1996. However, within the space of a year, from 1997 to 98, the Indonesian economy contracted rapidly due to the effects of the East Asian financial crisis. In 1998 after years of successful poverty eradication the proportion of population in extreme poverty was estimated to be 16.3% and rising.

For over 35 years Indonesia was ruled by the corrupt and authoritarian Suharto regime which relied upon the military to impose social order through brutal and repressive means. Despite the widespread repression and corruption the Indonesian economy grew at a healthy and sustained rate for over two decades and great strides were made in reducing the levels of poverty and income inequality within Indonesian society. While economic conditions remained buoyant the malpractices of the Suharto regime were tolerated. The economic crisis which began in 1997 has however, dramatically transformed the political climate. The economic hardship tearing at the fabric of society, caused people to protest and increasingly riot against the corruption, cronyism and nepotism of the Suharto regime.⁵⁴ In the face of mounting opposition and political turmoil Suharto resigned in May 1998. Dr. Habibie, Suharto’s right-hand-man, now presides over a regime that remains military-dominated, undemocratic and repressive, and continues to commit atrocities in East Timor, Aceh and Irian Jaya. The death toll from the widespread violence rises every week. Indonesia’s chaotic internal political situation shows little sign of stabilising at the time of writing in May 1999.

Economic Performance and Development [top]

Before late 1997, Indonesia was a middle income country. Its extraordinary progress in poverty reduction from 60 percent of the population in the 1960s to 15 percent in 1996 has been well-documented. Gains in the health and education sectors were equally remarkable and much progress was made in improving the gender gap. These gains are now in jeopardy as the socio-economic effects of the East Asian financial crisis takes their toll.

Table: Indonesian Economic and Social Indicators
 

Key Economic Indicators	1976	1986	1996	1997
GDP, $bn	39.3	79.9	227.4	214.6
Exports/GDP	24.5	20.2	25.8	28.1
Current account balance/GDP	?	?	-3.5	-1.2
Interest payments/GDP	1.2	3.0	2.2	2.7
Total debt/GDP	35.6	53.7	56.7	64.3
Total debt service/exports	-	-	35.5	-

Poverty and Social indicators, 1997
Population, millions	200.1
GNP per capita, $	$ 1,110
Population growth, annual %	1.6
Poverty, % of pop below poverty line	15
Life expectancy at birth	65
Infant mortality per 1,000 live births	47
Child malnutrition, % children under 5	40
Illiteracy, % of population age 15+	16
Source: World Bank Development Data 1999

The Indonesian economy with its underdeveloped banking sector and its high degree of speculative foreign investment was highly susceptible to the flight of capital that spread across East Asia in the second half of 1997. Years of development gains were wiped out in a matter of weeks as the local currency, the rupiah, lost 80% of its value against the dollar and inflation soared to over 50%. The Indonesian stock market lost 50% of its value. The economy which had sustained high rates of economic growth for decades contracted by ten to fifteen percent. The crisis hit Indonesia when it was experiencing its worst drought in fifty years, and the international oil price was registering a sharp decline.

Overnight Indonesia became a heavily indebted nation. Estimates put non-performing loans from domestic banks at more than 30 per cent of GDP in Indonesia. To this must be added an overhang of unpayable external debt, estimated at $22bn.⁵⁵ The situation in Indonesia is not just a financial and economic crisis but a human one - with the well-being of many millions of people at stake. Rampant unemployment and inflation have pushed literally millions of households back into poverty. In 1996 some 4.5 million people were already unemployed but, due to the effects of the crisis, official estimates suggest that an additional 10 million had lost their jobs by early 1999, although many may have moved into low-paying urban and rural informal sector work rather than open unemployment. School attendance and health are under threat, and the gender gap appears to be widening again. The economic crisis has hit households hard through sharp price shifts and a public spending squeeze. Food security has become a major concern as dramatic price increases for basic foodstuffs affect consumption and nutritional patterns - particularly for women and children.

The IMF bailed out Indonesia to the tune of $43bn to help stabilise its foreign exchange situation and has insisted on a stringent programme of economic reforms. Initially, Fund officials and the US Treasury were confident that macro-economic stability would return as long as the Indonesian government complied with the IMF’s reform programme.⁵⁶ But it soon became apparent even to the IMF that macro-economic stability depended upon political stability.

Characteristically the IMF displayed complete insensitivity to the socio-economic situation of the Indonesian people by insisting on cuts of government food and fuel subsidies. This had the effect of intensifying the level of riots and demonstrations. In May 1998 the IMF reluctantly adjusted its reform programme to take account of the political and social fragility of Indonesian society. In tandem, the World Bank has implemented a social safety net programme to ameliorate the worst effects of the economic crisis.

The economic and political prospects for Indonesia are sobering. Output in 1998 is estimated to have declined by 15%. Given the depth of the crisis, the economy will face ongoing challenges to foster employment and income generating activities for many years to come. While the economy remains in crisis the opportunity for political stabilisation remains remote.

UK Policy Towards Indonesia [top]

Currently the UK government’s policy towards Indonesia lacks cohesiveness, reflecting the divided interests of the different departments within Whitehall.

Traditionally DfID has refused bilateral support to the Indonesian government because of its poor human rights record. However, the social impact of the financial crisis has caused DfID to reconsider its position towards poverty alleviation in the country. Funding has been allocated to the Community Recovery Programme, a social safety-net programme established by Indonesian civil society. It is also working with the World Bank in the area of health sector finance to help ensure that the IMF structural reform measures do not overlook the needs of the most vulnerable. In addition DfID is providing support to a UNICEF infant feeding programme in West Java.⁵⁷ In total, bilateral funding for Indonesian development projects amounted to £7.1m in 1998/99 and is planned to increase to £10m in 2001/02.⁵⁸

In marked contrast to DfID’s principled position, the Defence Export Services Organisation of the Ministry of Defence has to all intents and purposes ignored Indonesia’s deteriorating economic, social and political circumstances by ruthlessly pursuing arms sales to Indonesia. The decision to sell arms to Indonesia has raised many questions about the strength of the Labour government’s commitment to its ethical foreign policy and indeed about its commitment to sustainable development and conflict prevention.⁵⁹

The UK has been selling arms to Indonesia for over two decades. British Aerospace began to sell Hawk jets in 1978. In November 1996, amidst considerably public controversy due to the deteriorating political and human rights situation in East Timor, 16 more Hawk-209 aircraft were licensed for export to Indonesia. The Conservative government at the time argued that they were not ‘likely’ to be used for internal repression and repeatedly denied that there was substantial evidence that Hawks had ever been used against people in East Timor or Indonesia. The licence was extant but not used when the Labour government came to power.

On 28th July 1997, within three months of announcing ‘an ethical foreign policy with human rights at its heart’, the Labour government confirmed that it would not revoke the licences for the sale of the Hawks, or for water cannon and Scorpion armoured cars. This decision was made despite calls by international human rights organisations to refrain from supplying arms to the Suharto regime because of its persistent pattern of human rights violations and its occupation of East Timor.⁶⁰

Defending his decision to transfer arms to Indonesia, Cook said that the contracts agreed to under the previous Conservative administration were legally binding and therefore had to be honoured. It is highly doubtful that if the Labour government chose to revoke the licences to Indonesia it would be liable to pay compensation to the UK manufacturers. Article 7(1) of the Export of Goods (Control) Order 1994 states a licence ‘may be varied or revoked by the Secretary of State at any time’. Assuming therefore there is no guarantee in the licences about duration or compensation (it would be remarkable if there was), there is no liability incurred by the government if it decided to revoke the Indonesia licences. Moreover, precedents exist for revoking licences as in the cases of Iraq, Somalia, and Yugoslavia. These decisions have not resulted in the UK government facing compensation claims.

One suspects that the real explanation for transferring arms to Indonesia relate to the commercial interests of the UK’s most powerful lobbying force, namely the UK’s military industrial base. A caveat has been built into the Criteria Used in Considering Conventional Arms Export License Applications, which allows commercial criteria to be placed above ethical considerations in the government’s new arms trade policy, captured in the statement; ‘full weight should be given to the UK’s national interests when considering applications for licenses, including:.....the protection of the UK’s essential strategic industrial base.’⁶¹ In recent years Indonesia purchased 60% of its arms imports from the UK. As a result, Indonesia has been identified as one of the most lucrative East Asian arms export markets for UK companies.⁶² The current economic and political crisis in Indonesia has done nothing to dampen the Labour governments resolve to sell arms to the Indonesian regime.

The commercial interests of a highly-subsidised industrial sector appear to have overridden the governments ethical and development policies, revealing an enduring contradiction within UK foreign policy, at least as reflected in policies towards Indonesia.

Debt and Arms Sales to Indonesia [top]

In September 1998 the Indonesian government admitted that, because of its financial problems, it could not repay the debt for the Hawks. In February 1998, Margaret Beckett, then President of the Board of Trade, stated that the 1996 Hawk deal had been guaranteed by the Export Credits Guarantee Department to the tune of £280m, which represented 87% of the value of ECGD support for military exports for Indonesia in 1995-6. This sum had risen with interest to £362m in February 1999. Like the Hawk deal, the Alvis vehicles were covered by ECGD to the tune of £65m in 1996 and £2.1m in 1997.

Given the instability and continuing economic problems in Indonesia, it is not impossible that the taxpayer might have to cover all of the loan guarantees for arms, an amount of money which could be spent on more socially useful purposes such as humanitarian and development aid for the beleaguered Indonesian population.

  South Africa [top]

South Africa is a middle income country with a population of 41 million (1996) and a GNP per capita of $3,160. Twenty five percent of the population lives in extreme poverty. Extreme income inequality and the great differences in human development indicators between different racial groups are a visible legacy of the apartheid regime.

Economic Performance and Development [top]

In April 1994 South Africa held its first democratic election, marking the end of the highly repressive apartheid regime. From the outset, popular expectations of the South African economy were high, but the prognosis is not optimistic. Given a growth rate of 1.7%, a population growth of 1.7% and roughly 50% of the labour unemployed, declining export performance, a devalued currency and a rising debt burden to export ratio, the potential for redistributing wealth to overcome the inequalities of the past are limited.⁶³

Table: South Africa Economic and Social Indicators
 

Key Economic Indicators	1976	1986	1996	1997
GDP, $bn	34.5	62.7	126.2	129.0
GDP, % growth	2.3	1.1	3.2	1.7
Exports/GDP	28.3	31.8	27.5	27.8
Current account balance/GDP	-5.5	5.0	-1.6	-1.5
Interest payments/GDP	?	?	0.7	0.6
Total debt/GDP	?	?	20.6	19.5
Total debt service/exports	?	?	11.1	1.5

Poverty and Social indicators, 1997
Population, millions	38.4
GNP per capita, $	3,400
Population growth, annual %	1.7
Life expectancy at birth	65
Infant mortality per 1,000 live births	48
Child malnutrition, % children under 5	9
Illiteracy, % of population age 15+	18
Source: World Bank Development Data 1999

Since 1994 the government has made considerable headway in refocusing public expenditures and social policies into development priorities. Substantial cuts were made in military expenditures and measures were taken to consolidate a ‘peace dividend’ from military savings in order to enhance the country’s development goals⁶⁴: Between 1994-96 some R1.2bn (£240m) was reallocated from the defence budget to the Reconstruction and Development Programme (RDP).⁶⁵

The RDP was a transition strategy designed to remove the structural legacies of apartheid. Its key strategies included meeting basic needs through land reform, housing provision, the supply of clean water, sanitation and electricity to homes, investment in public transport and infrastructure, developing human resources by improving the black education system and diversifying the economy away from the production of primary commodities such as agricultural goods and minerals into higher value added manufacturing.⁶⁶

The RDP was a carefully articulated social and political programme designed to redress the inequalities of apartheid. It was designed to meet the high expectations of South Africa’s impoverished black population and to enhance their economic security. In this respect the South African government had a clear perception of the relationship between security and sustainable development. The 1996 White Paper on Defence argued that ‘The RDP is the principal long-term means of promoting the well-being and security of citizens and, thereby, the stability of the country. There is consequently a compelling need to reallocate state resource to the RDP.’⁶⁷ Mounting macro-economic pressures, however, forced the government to abandon the RDP in 1996. It was replaced by the Growth Employment And Redistribution (GEAR) strategy which represented a less interventionist and more orthodox approach to macro-economic management. The adoption of GEAR appears to have to put an end to the development and redistribution aspirations of the government.

Economic constraints and pressing development needs combined with the high expectations of the black majority do not augur well for internal stability. Endemic problems such as the Aids pandemic, persistent poverty, unemployment, corruption, criminal violence and the proliferation of small arms make it evident that stability in South Africa is highly fragile. Already the security forces are preoccupied with what some have described as a ‘low level civil war situation’ in KwaZulu-Natal. Furthermore, internal troop deployments have been made in support of the South African Police’s struggle against mounting violent crime. The scale of criminal activity in South Africa has got to a point where it seriously inhibits foreign direct investors. In South Africa, crime is popularly referred to as ‘redistribution by other means’ and is seen in some quarters as a reflection of the South African government’s inability to address the inequities within the South African society.

The UK’s role [top]

The UK government provides support to the South African government’s development priorities via DfID’s bilateral aid programme which promotes:

• pro-poor investment for sustainable job creation and income generation
• improvements in the effectiveness of the Government in delivering essential health, education, water and sanitation services to the poor
• support for sustainable rural livelihoods and initiatives with direct benefit to poor people⁶⁸

In 1998/99 DfID spent £26m on bilateral assistance for development programmes in South Africa.⁶⁹ Planned development expenditures for 1999/00 - 2001/02 are estimated at £30m per annum.

At the same time that DfID has been working with the South African government to promote development programmes, the UK government has relentlessly pursued arms sales to South Africa on behalf of UK companies.

The Rearmament of South Africa [top]

Despite South Africa’s urgent development needs and chronic problems of poverty and crime, in January 1999 Deputy Prime Minister Thabo Mbeki announced the cabinet’s provisional approval of the decision to re-equip the South African National Defence Force (SANDF). The items to be procured include;

• 28 Gripen fighters from BAe/SAAB for £1.09bn
• 24 Hawks trainer fighters from BAe for £470m
• 4 corvettes-class patrol boats from a German shipbuilding consortium
• 3 diesel submarines from the German submarine consortium
• 4 super Lynx helicopters from GKN-Westland
• 40 light helicopters from the Italian firm Agusta in which GKN-Westland has a stake

The total programme is valued at £3bn or R29bn, to be spread over fifteen years. Because of budgetary constraints the lead in times are very long. The warships and their helicopters are due to be delivered by 2002-04, the submarines by 2004-06, the light helicopters by 2003-07, the Hawks by 2007-09, the Gripens not until 2009-14. The costs, spread over fifteen years, will amount to an extra £200m (or R2bn) per annum, representing a 20% increase in the military budget.

The Cabinet has agreed to this increase despite otherwise tight monetary and fiscal policies because of the prospects of easy finance via a soft loan on which no payment is to be made until 2001 and the generous offset deals procured from foreign suppliers. Currently the South African government insists on 80% offsets on all military imports, but has set a target of 100% for these specific deals, of which 50% will involve investment in the local military industry and 50% will be invested in civil industry. In total the South African government has insisted on a total investment worth £10bn which it hopes will create 65,000 jobs.

While South Africa is in desperate need of employment generation, given an unemployment rate of over 50% within the black townships, the sort of jobs that direct offsets are likely to generate within the military industry will predominantly be for the white skilled workforce that face far less hardships than the black labour force.

In justification of the programme, the South African government has claimed that it will enable South Africa to be the policeman of sub-Saharan Africa. Certainly this is a role that foreign powers have been nurturing South Africa for. But within the Southern African region, South Africa’s rearmament can only be viewed with consternation. Regional security co-operation via Southern African Development Community (SADC) is at an all time low due to the fundamental differences over policies towards the war in the Democratic Republic of Congo. Moreover, the general remilitarisation of the region, reflected in rising military expenditures, and a general trend towards rearmament suggests that foreign suppliers should err on the side of caution if such early warning signs are to be heeded seriously.

In securing a sizeable proportion of the rearmament programme Tony Blair has promised £4bn worth of investments linked to the UK component of the arms deal. The deal is also likely to increase South Africa’s debt burden. Although the UK companies involved are expected to provide the offset investments, export credit guarantees will undoubtedly be supplied to underwrite the risks being taken by UK firms involved in the deal. The weighting of UK resources towards facilitating a controversial arms deal, in contrast with the resources made available for development purposes, raises some uncomfortable ethical questions about UK priorities towards South Africa.

To all intents and purposes it undermines DfID’s attempts to restrict arms flows and reduce weapons proliferation in the Southern African region. At the same time it exacerbates the regional ‘security dilemma’ by enhancing South Africa’s military power projection capabilities and effectively increasing the sense of insecurity of neighbouring states. Indirectly this may further undermine regional security co-operation via SADC.

At a time when South Africa is clearly facing economic difficulties which may have serious implications for internal political stability, and when the region is undergoing an alarming process of remilitarisation which is enhancing the role of the military vis a vis civil society within the region, UK priorities towards South Africa appear very short-sighted and highly contradictory.

Conclusion [top]

If the UK is to champion development concerns in international forums, it needs to re-examine the current anomalies within its own national practice.⁷⁰ Selling weapons to countries facing acute development and debt problems contradicts the government’s goal of reducing global poverty, enhancing development and preventing conflict.

Scarce national resources used to purchase weapons invariable imply an opportunity cost to development. In highly indebted countries, particularly those that have official HIPC status, arms transfers are unethical, not only because of the missed opportunity for development, which in very poor countries translates into poor quality of life and in some cases loss of life, but also because many of these countries are conflict prone as a result of the systemic problems of poverty and inequality. As witnessed in Indonesia, growing food insecurity has resulted in protest and riots in which the military have indiscriminately turned their weapons on unarmed civilians.

Kofi Annan in his Report on Africa to the United Nations Security Council stated that

‘Arms exporting countries have a responsibility to exercise restraint especially with respect to the export of weapons into zones of conflict or tension’.⁷¹ His appeal was made not only because of humanitarian considerations but also because of the costs of conflict to development. The withholding of weapons sales is a powerful political tool which not only sends signals to the regime concerned, but provides affirmation to the global community of an ongoing commitment to the universal norms and values which uphold the indivisible aims of universal human rights and sustainable development.

The UK’s persistence in selling arms and extending credit to repressive military or authoritarian regimes in the developing world, represents a missed opportunity to champion international norms and values based on human rights and sustainable development. As a leading developed economy, the UK should foster development for the whole of humanity and eschew the vested interests of its national military industrial base. The government’s current arms sales policy undermines this imperative because arms transfers contribute to the impoverishment of developing countries and the burden of unsustainable debt which in turn undermines the security of developing states and its citizens.

Something is fundamentally wrong with the value system of a society that places the subsidisation of the arms market higher on its international agenda than the alleviation of debt and poverty and the promotion of sustainable development. Overseas development aid is much more than a hand out to the worlds poor, it is an essential part of investing in global security.

The current contradictions between the UK’s arms trade policies, debt and development are likely to persist until there is greater public accountability in the arms trade decision making process, which allows civil society a chance to challenge the vested interests of the military lobby and the Whitehall mandarins. Until such time, the fundamental dilemma between development and commercial gain in the UK’s arms trade policies are likely to remain at odds.

Notes [top]

1 World Bank External Debt of Developing Countries and HIPCs (1996), HIPC Implementation Unit @ http://www.worldbank.org/
2 Jubilee 2000 The Debt Cutters’ Handbook, London, Jubilee 2000 1996
3 UNDP Human Development Report 1994, New York and Oxford, Oxford University Press, 1994 p. 1
4 World Bank Development Data 1998 @ http://www.worldbamk.org/data
5 William Zartman, ‘Introduction: Posing the Problem of State Collapse’, in Zartman (ed) Collapsed States: The Disintegration and Restoration of Legitimate Authority, Colorado and Lynne Rienner Publishers, Inc, (London, 1995), pp1-11
6 There are two ways of looking at opportunity costs. The traditional approach uses opportunity costs as a marginalistic concept. In this concept the opportunity cost of defence is, for example, how many units of education or social welfare are sacrificed in order to increase defence output by one unit. The other way of analysing opportunity costs is to examine the total amount of resources devoted to an activity. In a well functioning economy the opportunity cost of an activity will quite simply be given by the expenditure for that purpose. In this context the social value can be equated with the prices of different items. With the latter approach the larger the sum spent on defence the higher the opportunity costs of defence.
7 United Nations Development Programme, Human Development Report 1994, Oxford University Press: Oxford, 1994, p50
8 For a detailed overview of these direct and indirect costs see Nadir Abdel Latif Mohammed ibid pp50-56
9 IISS Military Balance 1998/99, Oxford, Oxford University Press for IISS, pp295-300
10 Details on Sub-Saharan Africa military expenditures taken from IISS ibid. pp235-238
11 World Bank ‘World Development Indicators 1998 Table 5.7 Defence Expenditure and Arms Trade’ available at http://www.worldbank.org/
12 Details taken from IISS The Military Balance 1998/99, Oxford Univeristy Press for IISS, London, 1999, p116-117
13 Human Development Report 1994, p51
14 Richard F. Grimmett Conventional Arms Transfers to Developing Nations, 1989-1996, Washington D.C. Congressional Research Service, 1997
15 Laurence op.cit.
16 IISS ‘Tackling the problem of light weapons: The Micro-disarmament policy debate’, Strategic Comments, Vol. 4, Issue 2. IISS, 1998
17 The Heavily Indebted Poor Countries (HIPCs) are Angola, Benin, Bolivia, Burkino Faso, Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Congo (Brazzaville), Cote d’Ivoire, Equatorial Guinea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Guyana, Hondurus, Kenya, Loa PDR, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Yemen, Zambia.
18J. Hanlon Dictators and Debt, Jubilee 2000 Report, November 1998, p1
19 See for instance G. Tansey, K.Tansey and P. Rogers A World Divided: Militarism and Development after the Cold War, London, Earthscan, 1994. M. Cranna for Saferworld The True Cost of Conflict London, Earthscan, 1994
20 Apartheid Caused Debt: The Role of Swiss and German Finance’ South Africa Jubilee 2000, available at http//www.aidc.org.za/j2000/acd/summary.html
21 UN Secretary General’s Report on Africa, New York, UN, Section 93
22 The World Bank Group The HIPC Debt Initiative: @ http://www.worldbank.org/
23 Kevin Watkins ‘Riderless horses and the third world handicap’, Guardian, 19th April 1999
24 Jubilee 2000 Coalition In your Own Backyard: Britain and the Debt Crisis: time is running out, Jubilee 2000 Coalition, 1999, p3
25 OECD, Military Expenditures in Developing Countries: Security and Development, Report of the Ottawa Symposium March 1997, Paris, OECD, 1997
26 Watkins op.cit.
27 UN Secretary General’s Report on Africa, UN Security Council, New York, 1998, Section 95
28 The concept of ‘odious debt’ first arose following the US capture of Cuba from Spain in 1898. The Spanish insisted that the US pay Cuba’s debts and the US refused on the grounds that the debt was imposed upon the people of Cuba without their consent and by force of arms. The concept was upheld and entered international law in 1923 following the case of Great Britain versus Costa Rica. The concept of ‘odious debt’ was recognised by the British House of Commons International Development Committee in May 1998 in its report on Debt Relief (paras 11 and 57)
29 Hanlon op. cit., p1
30 UN Secretary General’s Report on Africa, New York, UN 1998, Section 67
31 J. Boyce and M. Pastor International Financial Institutions and Conflict Prevention: Five Proposals, Memorandum for the Council on Foreign Relations Conference ‘Progress and Pitfalls in Preventive Action’, Council for Foreign Relations, New York, 11 December, 1997
32 DfID Departmental Report 1999, London, The Stationary Office, 1999, Section 6.1, p91
33 DfID Security Sector Reform and the Elimination of Poverty. A speech by Clare Short, Secretary of State for International Development, CDS, Kings College, London, 9 March 1999
34 Ibid p2
35 Ibid p3
36 Ibid p1
37 British Foreign Policy Opening statement by the Foreign Secretary, Mr Robin Cook, at a press conference on the FCO Mission Statement, Locarno Suite, FCO, London, Monday 12 May 1997
38 The Engineer, 4th September 1998
39 ‘Foreign Secretary Announces New Criteria to Ensure Responsible Arms Trade’, FCO Daily Bulletin, London, Monday 28 July 1997
40 DfID Departmental Report 1999, The Government Expenditure Plan 1999-2000 to 2001-2002, CM 4210, The Stationary Office Ltd, London, March 1999, p 92
41 World bank Development Data @ http://www.worldbank.org/
42 The Second Report From the Foreign Affairs Committee Sierra Leone HC 116-11, London, The Stationary Office, 1998
43 Sir Thomas Legg KCBQC, Sir Robin Ibbs KBE Report of the Sierra Leone Arms Investigation, HC 1016, London, The Stationary Office, 27th July 1998
44 In early 1999 the two UK companies, Sky Air Cargo and Occidental, which had shipped Sandline’s arms were involved in further supplies of arms to Sierra Leone. This time the weapons supplied - including AK 47s and 60mm portable mortars - were supplied to the rebels who are battling to overthrow the government of President Ahmed Tejjan Kabbah. Reportedly four hundred tons of arms ostensibly bound for Uganda and shipped from Bratislava the Slovak capital have ended up at the Kenema airstrip in Sierra Leone. For details see ‘British firms arming Sierra Leone rebels’ Insight, January 10 1999
45 Sir Thomas Legg KCBQC, Sir Robin Ibbs KBE Report of the Sierra Leone Arms Investigation, HC 1016, London, The Stationary Office, 27th July 1998, p3
46 Legg ibid See Chapter 3
47 Although one of Legg’s recommendations was that there should be explicit guidance to officials on how to manage relations with mercenary groups. Legg ibid, Section 11.9, p115
48 For a detailed discussion on the role of mercenaries see CAAT The Privatisation of Violence: New Mercenaries and the State, CAAT, March 1999
49 House of Commons Debate, 1 December 1998, c.670
50 ‘We Don’t Need Your Bloody Money’ The Progress, 9, April 1999
51 Ibid
52 Information supplied in the reply of Mrs Roche, President of the Board of Trade in Hansard 12th March 1998, Col 330, p332
53 Written reply of Tony Lloyd, Foreign Minister, to Dr Doug Naysmith MP, 17 February 1998
54 Rising poverty has exacerbated ethnic tensions resulting in attacks on Indonesians of Chinese origin, including the systematic rape of women
55 Angus Armstrong and Michael Spencer ‘Global Emerging Markets’, Deutsche Bank, August 1998
56 ‘IMF must start from scratch in Indonesia’, Washington Post, 21 May 1998
57 DfID op.cit., p111
58 DfID op.cit., p144
59 S. Willett, The Dilemmas and Contradictions of an Ethical Arms Trade Policy Bulletin of Arms Control, No 30, July 1998, pp11-19
60 Amnesty International ‘Indonesia and East Timor: Arms and security transfers undermine human rights’, AI Index ASA 21/39/97, 3 June 1997
61 ‘Foreign Secretary Announces New Criteria to Ensure Responsible Arms Trade’, FCO Daily Bulletin, London, Monday 28 July 1997
62 Private exchange with representative from the Defence Export Sales Organisation, London, June 1997
63 South Africa: Country Survey, 2nd Quarter, Economist Intelligence Unit, 1996
64 P. Batchelor and S. Willett Disarmament and Defence Industrial Adjustment in South Africa, Oxford, Oxford University Press for SIPRI, 1998, pp167-190
65 This decision generated a huge outcry from the military and its supporters and a fierce debate ensued about the macro-economic costs and benefits of South Africa’s military expenditure to the South African economy. See Williams R. and Omar A. Government must think twice before cutting defence budget, Business Day, 9th May 1994 and Willett S. and Batchelor P. Behind the Call to Arms, Sunday Times, 11th September 1994
66 ANC (1994) Reconstruction and Development Programme: A Policy Framework, Johannesburg, Umanyano Publications
67 South African Ministry of Defence, Defence in a Democracy: White Paper on Defence, 1996, Pretoria, May 1996, p5
68 DfID ibid, p104
69 DfID ibid, p14
70 For a detailed account on the need for UK arms export policy reforms towards Indonesia see Malcolm Chalmers British Arms Export Policy and Indonesia, Saferworld, Research Document, May 1997
71 UN Secretary General’s Report on Africa New York, UN, 1998, p 9

Acronyms [top]

DfID Department for International Development
DTI Department of Trade and Industry
ECGD Export Credits Guarantee Department
ECOWAS Economic Community of West African States
EU European Union
FCO Foreign and Commonwealth Office
GDP Gross Domestic Product
GNP Gross National Product
GEAR Growth Employment And Redistribution strategy (South Africa)
HIPC Heavily Indebted Poor Countries
IISS International Institute for Strategic Studies
IMF International Monetary Fund
KANU Kenya Africa National Union party
MoD Ministry of Defence
OECD Organisation for Economic Cooperation and Development
RDP Reconstruction and Development Programme (South Africa)
RUF Revolutionary Unified Front (Sierra Leone)
SADC Southern African Development Community
SANDF South African National Defence Force
SIPRI Stockholm International Peace Research Institute
UAE United Arab Emirates
UNDP United Nations Development Programme
UNICEF United Nations Children’s Fund