U.S. tightens exports to China’s chipmaker SMIC, citing risk of military use
The Swedish government is working on a bill to tighten arms sales to undemocratic countries. As opposed to Sweden’s attempt to introduce stricter rules on weapons transfers, France is trying to expand its export of military equipments.
The gulf between Swedish and French arms-export policies shows that despite repeated pledges by leaders of the European Union to deepen the bloc’s defense integration, member states continue to go it alone when it comes to defense-related sales.
Asia is becoming the most important market for European defense industries and the evolution of the EU’s internal debate on regulation of arms export will have an impact on the acquisition strategies of potential buyers from the Middle East and the Indo-Pacific region.
The Swedish democracy clause
The legislation proposed by the Swedish government contains a “democracy clause” for exports of weapons in that country. The bill has received across-the-board political support in the northern European country and is expected to be approved next year.
Sweden is now a major arms exporter. As a result, its status as a neutral nation committed to the protection of human rights and promotion of conflict resolution has been questioned in the past few years. Notably, the leadership in Stockholm is under fire for not blocking the delivery of Swedish weapons systems to authoritarian states such as Saudi Arabia and the United Arab Emirates.
From 2012 to 2016, Swedish defense manufacturers transferred US$212 million and $160 million worth of arms to Abu Dhabi and Riyadh respectively, making the UAE the second-largest recipient of Swedish military-related items and the Saudi kingdom the third one, according to the Stockholm International Peace Research Institute (SIPRI).
During the same period, Sweden’s defense sector also made inroads into the Asia-Pacific region, where $549 million worth of arms from the Nordic country were delivered. Thailand is now a key client of Swedish defense contractors, which do not hesitate to deal with the ruling military junta led by Prime Minister Prayut Chan-o-cha.
Saab Aeronautics is in fact in talks with the Thai government to place a further order for the Gripen C/D fighter jet, the precursor of the next-generation Gripen-E platform – Saab completed the delivery of 12 Gripen C/D fighters to Bangkok in 2013.
In addition to Thailand, Saab views the Philippines as a potential buyer of its Gripen fighters. However, the Philippine government of President Rodrigo Duterte is under scrutiny by the EU for its violent anti-drug policy and the possible reintroduction of the death penalty in the country.
Much to the chagrin of Saab and other defense manufacturers in Sweden, the probable approval of the new Swedish code of conduct on arms sales will make it more difficult to do business with the Gulf monarchies, Bangkok and Manila, at least under the current political conditions.
France aims at the Asian market
In contrast to Sweden’s arms-export policy, France is betting big on the growth of its industrial defense sector. On July 7, the French Defense Ministry released a report on the country’s weapons exports. According to the document, French defense producers placed orders for military equipment worth $16.1 billion in 2016, of which $11.3 billion was in the Indo-Pacific region and $1.5 billion in the Middle East.
The big prizes were the transfer of 36 Rafale multi-role fighters to India, 12 modified Barracuda-class submarines to Australia and 30 Caracal military helicopters to Kuwait.
Talking about the report, new French Defense Minister Florence Parly said last week that the government would be committed to boosting the export capacity of the French defense sector. She also emphasized the importance of the Asian market in advancing the country’s military industry.
EU’s ineffective arms-export policy
The EU assumed a common position over export of military equipment and technology in 2008. The European bloc’s system has proved dysfunctional, however, as each member state interprets the relevant rules in a different way.
In this regard, the treatment of China represents a case study. Some European countries systematically circumvent the EU arms embargo on Beijing, which Brussels imposed after the crackdown on Tiananmen Square protests in 1989. Since then, France has sold to China $4.3 billion worth of defense-related items, Britain $820 million and Germany $261 million, SIPRI reports.
Except for French deliveries of transport and multi-role helicopters, the three European heavyweights have transferred in large part components, dual-use platforms and sub-systems, including the relative technology. In particular, Beijing has managed to purchase diesel engines and radars for its frigates and destroyers from European suppliers.
In late June, EU governments agreed to pool resources to buy or jointly build up defense equipment, but the prospect is completely different for arms sales. The political and ethical distance between Swedish and French arms-export policies tell that the European grouping will struggle to elaborate a more effective common legislation on the issue.