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"Since this action was prompted by letters and inquiries from the public, Commerce did not feel the need to consult with industry on the expansion of controls."
from Commerce Dept. Report to Congress on Imposition of Foreign Policy Export Controls on Specially Designed Implements of Torture and Thumbscrews
Meeting in Wassenaar, Netherlands on 18-19 December, the U.S. and 27 other governments agreed to the formation of a new regime on exports of weapons and dual-use military technologies (see ASM No. 31 p. 3). The good news is, it's no longer called the "New Forum"; the bad news is, it's called "the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies."
According to a State Department fact sheet, the arrangement will primarily be a forum for consultation and transparency, and "where appropriate, multilateral restraint" on weapons and dual-use technology transfers. The regime relies on each participating nation's own laws and policies to monitor and control export of items on the forum's munitions and dual-use technologies lists.
The fact sheet says, "A central part of the regime is the commitment by its members to prevent the acquisition of armaments ...whose behavior today is, or becomes, a cause for serious concern, such as Iran, Iraq, Libya and North Korea."
When asked in January what the criteria are for inclusion on the bad-guy list, Under Secretary of State Lynn Davis said UN arms embargoes were key in the case of Iraq, Libya and North Korea. Iran is included because of nuclear weapons aspirations, support for terrorist groups, and opposition to the Middle East peace process.
The first plenary meeting of the new body will be held in Vienna on 2-3 April.
Large anti-government demonstrations broke out in early Januaryafter several months of calmand continued throughout February; three bombs ripped through wealthy sections of the capital, Manama. The protestors are demanding a restoration of the parliament (which the ruling clique dissolved in 1975), jobs, freedom of speech, the release of political prisoners, and the return of deported dissidents.
According to Reuters, Bahraini forces have fired live ammunition and tear gas into the crowds. Over 2,000 protestors and seven opposition religious leaders have been arrested in this flare up. The clerics stand accused of preaching dissent from the mosques. Shiite Muslims make up 65 percent of Bahrain's population. The ruling al-Khalifa family, which is Sunni, claims that Iran is fomenting the uprising
State Dept. on Bahrain Instability
"What role, if any, did Iran play in the recent demonstrations? ...[T]here has been no indication of any direct link between Iran and the situation in Bahrain. We judged the unrest resulted from problems internal to Bahrain."
"What is the U.S. position on the demands of the opposition that an elected parliament be restored? The United States supports expansion of political participation for all Bahrainis. We support dialogue and inclusion in the political process, but oppose any movement that would use democracy as a guise to seize power....At the same time, we have encouraged the Government of Bahrain to expand the publicity and scope given to the appointed advisory council which recently completed a second session and will begin a third in the fall."
"Has the State Department urged the Government of Bahrain to grant entry into Bahrain and access to detainees by independent human rights organizations? The Ambassador on several occasions has raised the issue of access to detainees by independent human rights organizations with senior officials in the Government of Bahrian. To date, however, no such visit has taken place."
"Does the unrest affect U.S. plans to headquarter the 5th fleet in Bahrain? No....We do not believe that the unrest in Bahrain is a threat to the continuted presence of...U.S. Central Command on the island." Overview of U.S. Policy in the Middle East, hearing of the House International Relations Committee on 2 August 1995, p. 118
December marked the 20th anniversary of Indonesia's invasion and continuing occupation of neighboring East Timor.
Charges resurfaced in January that Israel had transferred U.S.-origin military technology to China without U.S. approval. Israel is alleged to have transferred technology from, and perhaps even a prototype of, the Lavi fighter aircraft, which the United States financed and co-developed with Israel. The project was abandoned because of costs in 1987. Israel and China deny the charge.
Similar allegations were made in a 1991 State Department Inspector General's report (see ASM No. 15 p. 1). When asked at a 1993 hearing if Israel had passed sensitive U.S. high technology to China, the CIA refused to answer in public, citing concerns about sources and methods (see Threats of the 1990s, Sen. Hrg. 103-208).
A powerful bomb exploded at Saudi National Guard headquarters in Riyadh on 13 November, killing seven and wounding 60 more. Over 1,300 U.S. Army and civilian contractors work there training the Guard, whose main function is to protect the ruling family. Five of the dead and half of the casualties were Americans. Since the blast, the U.S. embassy has repeatedly advised the 30,000 Americans in Saudi Arabia to "keep a low profile."
Lt. Gen. Thomas Rhame, director of the Pentagon's arms sales agency, notified Congress two days after the blast that, "The overall effectiveness of the U.S. security assistance mission in Saudi Arabia is not expected to be hampered as a result of this incident."
(See Milton Viorst, "The Storm and the Citadel," Foreign Affairs, January/ February 1996 for an overview of political instability in Saudi Arabia.)
A dispute between South Korea and Japan over possession of the Tokto/Takeshima Atoll heated up in February. Tokyo's claim on the atoll dates back to 1905, but South Korea has maintained a small coast guard force on the island since 1954. South Korea recently began building a new wharf, which prompted an angry denouncement from Japan. South Korean President Kim Young Sam escalated, refusing to meet with a delegation of Japanese lawmakers and ordering military maneuvers around the islands on 15 February.
According to the 12 February issue of U.S. News & World Report, the CIA's "State Failure Task Force" has identified Turkey as a state at risk of collapsing. The anti-western Islamic party won a plurality in December parliamentary elections. Prime Minister Tansu Ciller's party lost just weeks after the sale of 120 Army Tactical Missiles, which showed the strong backing of the U.S. for her government (see ASM No. 31 p. 1).
President Clinton intervened in early February to head off a military confrontation between Turkey and Greece over a disputed Aegean island. Airspace violations are commonplace, and Turkey said last year it would consider it an act of war if Greece ratified the Law of the Sea Treaty, which would legally extend Greece's territorial waters. The two countries are the world's leading arms importers, according to the U.N. Register for the past three years.
Human rights and political abuses continue in Turkey's prosecution of its war on Kurdish militants and civilians. The PKK initiated a unilateral cease-fire in mid-December. To date, the Turkish government has not responded.
The U.S. Government approved $28.7 billion in exports of military equipment and services to more than 150 of the world's 180 countries in fiscal year 1995. Government-to-government sales, conducted through the Pentagon's Foreign Military Sales (FMS) program, declined to $9 billion. Egypt was the largest customer, contracting for over $1 billion of arms. Turkey purchased $600 million of weapons, and $320 million of "classified" arms sales were made.
The State Department approved an additional $19.7 billion worth of export licenses for direct commercial sales (DCS) negotiated by U.S. arms exporters and foreign buyers. DCS figures do not necessarily represent final deals, but they do represent official permission for the sales to be completed. The State Department estimates that about half of the export licenses result in actual deliveries. FMS figures, on the other hand, represent contracts signed.
President Clinton signed the fiscal year 1996 defense authorization and foreign aid appropriations bills into law in February, four months into the fiscal year. The defense appropriation became law in December. All three contain costly subsidies to boost U.S. arms exports.
New $15 Billion Financing Program Established
The defense authorization act (section 1321) directs the Secretary of Defense to establish a new "Defense Export Loan Guarantee" program, under which the U.S. government will insure commercial loans taken by countries to buy or lease American weapons (see ASM No. 30 p. 6). The defense appropriations act (section 8075) caps liability (principal and interest) that may be incurred at $15 billion.
The United States already has a grant and loan weapons financing program called Foreign Military Financing, which is part of the foreign aid budget. FMF will finance over $3 billion of weapons exports in FY 1996 (see box, next page). In addition, the authority of the Export Import Bank to guarantee military loans was increased last year. Recent arms sales underwritten by the Bank include an $80 million radar system for Romania and a $22 million Indonesian program to refurbish military transport planes.
The new measure was touted by proponents as costing U.S. taxpayers nothing. Buyers will pay a fee to cover the program's administrative costs, and the defense appropriations act requires that the "exposure fee"which protects against the risk of defaultbe charged to the customer. The act also mandates that the fee not be financed as part of the loan. This means that if U.S. taxpayers get stiffed on the loans, at least they won't get stiffed on the risk insurance.
The loan guarantees are available to NATO members, "major non-NATO" allies, newly democratic East European governments and non-communist members of the Asia Pacific Economic Cooperation forum.
After two years, the President must report to Congress on the costs and benefits of the program and make recommendations on the expansion of eligibility. Recoupment Fees to be Waived, instead of Repealed
Congress has effectively abolished the requirement that Foreign Military Sales include "recoupment fees" to recover some of the taxpayer-funded research and development costs for weapon systems being exported (see ASM No. 30 p. 6).
In a tactical shift, rather than repealing the provision of law that mandates recoupment fees, members of Congress slipped a new waiver provision into the Pentagon authorization bill. Section 4304 amends the Arms Export Control Act (section 21(e)(2)) to allow the President to waive recoupment fees if the added cost of these fees makes it "likely" that an arms sale will be lost, or if exports of the weapon system will lower the price of Pentagon purchases of the weapon.
Since the Clinton Administration has actively supported abolishing recoupment fees, it is likely the waiver will be used. However, the waiver may only be exercised if the President proposes and Congress passes as part of the FY 1997 budget some legislation to offset the revenues which will be lost through the waiver during FY 1997-2005.
In recent years approximately $170 million has been restored to the Treasury annually by the collection of recoupment fees. The General Accounting Office has estimated that if recoupment fees were charged on all arms sales, at least $500 million would be recovered annually.
The defense authorization act (section 1012) permits the grant transfer of four Perry-class guided missile frigates to Bahrain, Egypt and Turkey, and the lease of four more to Egypt, Oman and Turkey. These are rather new ships; all entered service between 1980-1982 and have served only half of their expected operational lives.
The Navy proposed giving away seven of the frigates and leasing one to the United Arab Emirates. In the past five years, the Navy has given away some three dozen frigates.
The act amends section 516(a) of the 1961 Foreign Assistance Act to limit future transfers of warships less than 20 years old to leases and sales exclusively.
The act also directs the Secretary of the Navy to "request and encourage" that repair and refurbishment work on the leased/grant frigates be performed at U.S. shipyards.
|Bills at a Glance
Year 1996 Foreign Operations, Export Financing
and Related Programs Appropriation Act
Fiscal Year 1996 National Defense
Fiscal Year 1996 National Defense
Foreign Military Aid
Congress appropriated $12.1 billion for foreign aid programs for FY 1996. Security aidwhich comprises over half of the totalis summarized in the accompanying box. See ASM No. 29 for the administration's requested levels and ASM No. 27 for a comparison to last year's appropriation.
The act bars aid to Cuba, Iran, Iraq, Libya, North Korea, Serbia, Sudan and Syria. Foreign Military Financing (FMF) is prohibited for Liberia, Peru, Sudan and Zaire. Guatemala may receive FMF if the President certifies that Guatemala's military is working to resolve human rights abuses. Colombia and Bolivia can receive FMF only if the Secretary of State certifies that the funds will be used "primarily" for anti-narcotics activities and not to fight insurgent political groups.
International Military Education and Training (IMET) funding is increased to $39 million this year. Service officials have lobbied hard for IMET in recent years, citing the importance of meeting foreign counterparts. Conferees suggest that an "expanded IMET" programwith a focus on "human rights, military justice, and civilian management and control of the military"would benefit officers from countries that are barred from receiving regular weapons-related training, such as Indonesia and Guatemala. Zaire is prohibited from receiving any IMET funds.
In a show of displeasure over Turkey's continued poor human rights performance, as well as non-cooperation on humanitarian relief in Armenia and resolution of the hostilities in Cyprus, Congress cut Turkey's Economic Support Fund paymentan untargeted cash grantby two thirds.
During FY 1992-1995, Congress appropriated $900 million to stockpile military equipment in Israel for use by the U.S. or Israel in an emergency. This law provides $200 million more for the Israeli stockpile in FY 1996 and directs that, in the future, additions may be made to stockpiles in Israel without statutory authorization. The act appropriates $50 million for additions to similar stockpiles in South Korea and Thailand.
The law permits both Jordan and Bosnia to receive up to $100 million in military equipment, services or training for free. Senate conferees also want Jordan designated as a "major non-NATO ally" which bestows preferential treatment in arms sales. They also urge that Jordan be permitted to receive up to 80 U.S.-designed M-1A1 tanks built under license in Egypt.
The appropriations law makes Lithuania, Latvia and Estonia eligible for lethal, as well as non-lethal excess defense articles.
Appropriated Security Aid, FY 1996 Foreign Military Financing $3,208,390,000 Israel $1,800,000,000 Egypt $1,300,000,000 Greece $26,517,647 (to underwrite loans of $224,000,000) Turkey $37,882,353 (to underwrite loans of $320,000,000) Central Europe Initiative $20,000,000 Economic Support Fund $2,340,000,000 Israel $1,200,000,000 Egypt $815,000,000 Turkey $33,500,000 International Military Education & Training $39,000,000 International Narcotics Control $115,000,000 Anti-terrorism Assistance $16,000,000 International Criminal Justice $30,000,000 Prepositioned Stockpiles $250,000,000 Israel $200,000,000 South Korea $40,000,000 Thailand $10,000,000 Drawdown of Military Equipment $200,000,000 Jordan $100,000,000 Bosnia-Herzegovina $100,000,000 Source: H.R. 1868 and House report 104-295
From November through mid-February, the administration notified Congress of the following government-negotiated Foreign Military Sales (FMS) agreements, export licenses for industry-negotiated Direct Commercial Sales (DCS), leases of equipment, and reduced price or free excess defense article (EDA) transfers to developing countries. The Arms Export Control Act only requires that the administration notify Congress of FMS and DCS valued at $14 million or more. Sales below that threshold are not recorded here. Congress has 30 days to stop proposed FMS agreements or DCS licenses from going forward (15 days for NATO members and major non-NATO allies). For EDA transfers, the Pentagon is authorized to ship the items 15 or 30 days after Congress is notified. To block a sale, a two-thirds majority in both houses of Congress must pass a resolution of disapproval. None of the following sales were challenged, meaning that all may proceed.
The Defense Department is required to transmit quarterly "Price and Availability" (P&A) reports to Congress. The reports, which are broken down into two parts, give Congressand the publica heads up on future sales.
The first section lists requests by countries for price estimates on specific weapons packages. These estimates happen early in the arms sales process, when countries are deciding what to buy. They are also an early indication of U.S. willingness to make a sale.
Once a country settles on the type and quantity of weapons, it requests a Letter of Offer and Acceptance (LOA), the formal U.S. government-to-government contract. The P&A report also lists requests for LOAs.
When relevant administration officials have approved the request, the Pentagon notifies Congress of the proposed sale. (The preceding "deals in the works" table reports sales at this stage of development.) By this stage, the U.S. government, arms manufacturer and customer have already spent months or years planning the arms deal.
The accompanying box is drawn from two recent P&A reports (for the quarters ending 30 June and 30 September 1995), which we obtained from the Pentagon under the Freedom of Information Act. The classified reports are redacted heavily before being released.
Nigeria On 10 November Nigeria's military rulers executed playwright Ken Saro-Wiwa and eight other Ogoni political activists, despite pleas by the United States and many other nations that the nine be spared. President Clinton announced a ban on the provision of military goods and services to Nigeria the following day. The government will deny all new arms export license requests, and suspend any previously issued licenses until further notice (see ASM No. 22 p. 7). The State Department announced that this action is being taken "to underscore the importance the United States attaches to an orderly and timely transition to unhindered elected civilian government, as well as to respect for human rights." (Federal Register 21 December 1995 p. 66334)
Peru/Ecuador Effective 13 November, "it is no longer the policy of the U.S. government to deny all request for licenses and approvals to authorize the export or other transfer of lethal items to Ecuador and Peru. All requests will henceforth be reviewed on a case-by-case basis. Exports will be evaluated in light of the recent conflict between these countries and the desirability of promoting multilateral restraint in arms transfers to Peru and Ecuador." (Federal Register 13 November 1995 pp. 57049-50)
The United States imposed an arms embargo on Peru and Ecuador last February, following the outbreak of a border skirmish between the two, which left 78 dead and hundreds wounded (see ASM No. 29 p. 6).
The Commerce Department's Bureau of Export Administration is responsible for licensing exports of "dual-use" goods and technologies, those with significant civil and military uses. (The State Department licenses strictly military items.)
The Export Administration Act (EAA) of 1961 provides the legal basis for controlling such exportse.g., computers, police equipment, and space technologyfor foreign policy and national security reasons. The law, which must be reauthorized periodically, lapsed in September 1994 (see ASM No. 27 p. 9). It remains in force under Executive Order and the International Emergency Economic Powers Act.
Both the administration and Congress proposed a comprehensive new EAA in 1994, but the effort foundered over competing trade promotion and national security interests. There was no significant movement in 1995, and passage this year is unlikely, given Congress' heavy work load and short, election-year schedule.
Meanwhile, the administration has made several changes in the regulations implementing the EAA, and several ideas for reform have been proposed.
Export of "Specially Designed" Torture Equipment Barred
In a 13 November letter, Commerce Secretary Ron Brown notified Congress that the department is expanding export controls on torture equipment. The action was prompted, Brown said, by letters and inquiries from the public.
According to the letter, Commerce has moved thumbscrews and other "specially designed implements of torture" [Iron Maiden? "The rack"?] into a new, separate export commodity category. "There was, and there is now, a presumption of denial for a license to export these commodities," he said.
These torture items had been included with police equipment into a single licensing category. Because the Department refuses to release specific information on licenses it has approved, this combined category left the impression that torture items were possibly being exported. Concern was heightened since many of the countries receiving these licenses have poor human rights records (see ASM No. 30 p. 1).
In addition to separating these torture items from police equipment, licenses for such goods will now be required for all destinations. Previously, a license was not necessary to ship them to NATO member countries, Australia, Japan or New Zealand. Of this, Secretary Brown wrote, "we are unable to determine, but we do not suspect that any such shipments took place."
He said the policy changes are intended to "distanc[e] the United States from involvement in the violation of internationally recognized human rights." To achieve this goal, however, the Commerce Department needs to do more than clarify its position on the export of "specially designed" implements of torture. It must also restrict U.S. exports of "ordinary" implements of torture.
Commerce rules still permit exports of saps, shackles, electric shock batons, leg irons and other "police" equipment. Such equipment in a torturer's hand can become an "implement of torture." The State Department's Country Reports on Human Rights Practices, 1995 is due out in early March. Countries which show up badly there should not receive police equipment from U.S. manufacturers.
See Federal Register 28 November 1995 pp. 58512-14 for a copy of the new regulations. A copy of Secretary Brown's letter and report is available from our office.
Hamilton Says Transparency Needed
Rep. Lee Hamilton (D-IN), the ranking Democrat on the House International Relations Committee, asked the administration whether it planned to make public a list of U.S. companies that supplied or are supplying dual-use goods and services to Iraq. In a November letter to Secretary of State Warren Christopher, Hamilton wrote: "it is important to make information about all such companies public, on the theory that sunshine is the best deterrent of such transfers of dual-use items in the future." (Cong. Record 30 January 1996 p. E111)
Asst. Secretary of State Wendy Sherman wrote back in mid-January, noting that in 1991 the State Department "did distribute to Congressional committees...lists of U.S. firms involved in dual-use trade with Iraq prior to the Gulf War." The lists were not made public.
Sunlightand public oversightwould deter dangerous exports. Section 12© of the EAA is the legal basis for withholding information on dual-use exports from the public (see ASM No. 30 p. 1). Mr. Hamilton and other concerned Members of Congress should amend or abolish section 12© to permit public oversight.
DOD, State Get More Say in Dual-Use Exports
Executive Order 12981, signed by President Clinton on 5 December, gives the Defense, Energy and State Departments, as well as the Arms Control and Disarmament Agency, increased oversight of militarily-useful exports licensed by the Commerce Department. (Federal Register 8 December 1995 pp. 62981-5)
Administration Fiscal Year 1996 International Affairs Budget Request (hearing before the House International Relations Cmte., 30 March 1995) U.S. GPO: 1995, 161 pp.
American Overseas Interests Act (markup by the International Operations and Human Rights Subcmte. of the House International Relations Cmte., 8-9 May 1995), US GPO: 1995, 196 pp.
Burma: Narcotics, Democracy and Human Rights (hearing before the Foreign Operations Subcmte. of the Senate Appropriations Cmte., 24 July 1995), Sen. Hrg. 104-221, U.S.GPO: 1995, 81 pp.
Conventional Arms Transfer (special hearing before the Senate Appropriations Foreign Operations Subcmte. on 23 May 1995) , Sen. Hrg. 104-222, U.S. GPO: 1995, 130 pp.
Conventional Weapons and Foreign Policy in South Asia (hearing before the Senate Foreign Relations Subcmte. on Near Eastern and South Asian Affairs on 14 September 1995), Sen. Hrg. 104-226, U.S. GPO: 1995, 72 pp.
Defense Contractors: Pay, Benefits, and Restructuring During Defense Downsizing, General Accounting Office [NSIAD-96-19BR], October 1995, 44 pp.
The DISAM Journal, Defense Institute of Security Assistance Management (DISAM), Vol. 18, No. 1, Fall 1995, 138 pp.
DOD Procurement: Millions in Contract Payment Errors Not Detected and Resolved Promptly, General Accounting Office [NSIAD-96-8]: October 1995.
The Drug Trade in Mexico and Implications for U.S.-Mexican Relations (hearing before the Senate Foreign Relations Cmte., 8 August 1995), Sen. Hrg. 104-204, U.S. GPO: 1995, 80 pp.
Dual-Use Export Control Program (hearing of the International Finance Subcmte. of the Senate Banking Cmte., 21 Sept. 1995) U.S. GPO: 1995.
Effectiveness of the National Drug Control Strategy and the Status of the Drug War (hearing of the House Government Reform and Oversight Cmte., 6 April 1995) U.S.GPO: 1995, 190 pp.
Evaluating U.S. Foreign Policy (hearings before the House International Relations Cmte., January 1995), U.S. GPO: 1995, 197 pp.
Export Finance: Comparative Analysis of U.S. and European Union Export Credit Agencies, General Accounting Office [GGD-96-1], October 1995, 66 pp.
Federal Export Promotion Programs: An Academic Perspective (hearing before the Procurement, Exports, and Business Opportunities Subcmte. of the House Small Business Cmte., 23 May 1995), US GPO: 1995, 131 pp.
Hearing on Chechnya (hearing before the Commission on Security and Cooperation in Europe, 1 May 1995), CSCE 104-1-6, U.S.GPO: 1995, 48 pp.
The Iran Foreign Sanctions ActS.1228 (hearing of the Senate Banking Cmte., 11 Oct. 1995), Sen. Hrg. 104-275, U.S. GPO: 1995, 47 pp.
Issues in Export Control (hearing before the Subcmte. on International Economic Policy of the House International Relations Cmte., 25 January 1995) U.S. GPO: 1995, 86 pp.
Middle East Peace Process (hearing of the House International Relations Cmte., 20 Sept. 1995) U.S.GPO: 1995.
National Security: Impact of China's Military Modernization in the Pacific Rim, General Accounting Office Report to Congressional Committees [NSIAD-95-84], June 1995, 50 pp.
National Security Implications of Lowered Export Controls on Dual-Use Technologies and U.S. Defense Capabilities (a hearing of the Senate Armed Services Cmte., 11 May 1995), Sen. Hrg. 104-300, U.S. GPO: 1995.
Overview of U.S. Policy in the Middle East (hearing before the House International Relations Cmte., 2 Aug. 1995) U.S.GPO: 1995, 154 pp.
Overview of U.S. Policy toward South Asia (hearing before the Near Eastern and South Asian Subcmte. of the Senate Foreign Relations Cmte., 7, 9 March 1995) Sen. Hrg. 104-46, U.S. GPO: 1995.
The Situation in Nigeria (hearing before the African Affairs Subcmte. of the Senate Foreign Relations Cmte., 20 July 1995), Sen. Hrg. 104-206, U.S. GPO: 1995.
U.S. Policy Toward Iran and Iraq (hearing of the Eastern and South Asian Affairs Subcmte. of the Senate Foreign Relations Cmte., 2 March and 3 Aug. 1995), Sen. Hrg. 104-280, U.S. GPO: 1995, 174 pp.
Worldwide Threat to the United States (hearing before the Senate Armed Services Cmte., 17 January 1995), Sen. Hrg. 104-236, U.S.GPO: 1995, 93 pp.