Return to an Address of the Honourable the House of Commons
dated 18 July 1996 for the Appendices to the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions laid before The House on 15 February 1996*

Volume One
Section D Arms and Defence-Related Exports to Iraq
Chapter 1 The Howe Guidelines

Excerpt:
THE ANNOUNCEMENT OF THE HOWE GUIDELINES

D1.145 Paragraph 8 of Lord Howe’s submission to the Prime Minister had proposed that the Guidelines be allowed “to filter out through answers to Parliamentary Questions and enquiries from the media”. At the first IDC meeting, held on 5 December 1984, the question of publicity to be given to the Guidelines was discussed. The outcome of the discussion was recorded in paragraph 1 of the Summary Record:

“1. Notifying Companies of the New Guidelines
It was agreed that MOD should tell companies of the new guidelines informally as part of their regular contact. However, they would identify all companies holding current clearance to supply and inform them in writing that the earlier approval should not be relied upon in the light of the changed circumstances. It was also agreed that, although no opportunity to announce the guidelines would be sought, we should summarise the new criteria in some public fora, for example as a supplementary answer to a PQ.”

D1.146 Another matter discussed at the 5 December 1984 meeting was the withdrawal of the so-called “repair waiver” from certain categories of exports to Iran and Iraq. The continuance of the repair waiver in respect of all defence exports would, obviously, have been inconsistent with the new Guidelines. But companies were conducting their business and entering into repair contracts on the basis of the repair waiver and it was important that they should be put on notice of the withdrawal. It was agreed that “the removal of the repair waiver would be announced in the Business press.” *164 In a Note dated 5 December 1984 to Mr P C Sanders of the ELB, Mr Hall of OT4 suggested that “we ought ... to think in terms of a suitable circular letter, as well as a notice in British Business.” *165

D1.147 Discussion continued about the categories of goods in respect of which the repair waiver would (for Iran and Iraq) be withdrawn. The DTI suggested that the withdrawal should be confined to Military List items and, in the Industrial List, turbine engines (Group 3E) and navigational equipment (Group 3F). In a Note dated 21 December 1984 to Mr Sanders, Mr Lynch (SBP2a) referred to a proposed ban on hovercraft sales to Iran and suggested that the DSO (as it then was) ought to be the channel for informing companies about the ban and the withdrawal of the repair waiver. He said that “companies are likely to accept the international politics aspect of the ban if information about it comes from the MOD.” *166 And in a Note dated 2 January 1985 to Mr Sanders, Mr P J Casey (Air 1a) said that he believed it to be “important that any withdrawal of the waiver, and the policy to be pursued in dealing with licence applications for repair cases, should be publicly announced, so that the odium falls where it belongs, on HMG not on the firms.” *167

D1.148 On 18 January 1985, a draft of the notice to be placed in ‘British Business’ giving warning of the withdrawal of the repair waiver was sent by Mr Sanders to Mr Lavender of Sec (D Sales). The draft notice, *168 after setting out the extent of the withdrawal, said that “This action is being taken following a review of Government policy on defence sales to Iran and Iraq in the light of the continuing Gulf War. Applications for export licences will be considered on their merits and full account will be taken of existing contracts and obligations”. No indication was given in the draft either that the “review of Government policy” had resulted in the Guidelines or of the content of the important guideline (iii). In its comments on the draft, *169 the FCO asked for the words “following a review” to “continuing Gulf War” to be deleted and substituted with:

“in accordance with HMG’s policy of strict impartiality in the continuing conflict in the Gulf. HMG are determined that no defence equipment should be supplied which might prolong or exacerbate the conflict. Part of this process is rigorous scrutiny of all applications to export defence equipment to Iran and Iraq.”

With further minor drafting amendments, *170 this text was used in the version submitted by DTI for publication. In the event, therefore, although the content of guideline (iii) was mentioned in the manner described, no reference was made to the review of Government policy which had taken place.

D1.149 It is generally agreed, as the events and documents leading to the formulation and agreement of the Guidelines make incontrovertible, that the reference in guideline (ii) to “existing contracts” was a reference to contracts that had already been entered into when the Guidelines were agreed upon, i.e. pre-December 1984 contracts, including, in particular, the old IMS contracts for sales of defence equipment to Iran. But, the reference to “existing contracts” in the notice to be placed in ‘British Business’ reads like a reference to contracts in existence at the time that the export licence applications relating to the goods comprised in the contracts were made. Perusal of the draft notice at the FCO did not lead to any alteration to the “existing contracts” sentence. *171 The MOD, too, approved the form of the proposed notice and agreed that the DSO would, in advising individual companies of the withdrawal of the repair waiver, base their advice on the DTI draft. *172 The Notice, in the agreed form, was published in ‘British Business’ on 15 March and 12 April 1985. So, the Government decision not to have any public announcement of the Guidelines but to allow knowledge of them simply to “filter out”, resulted in the publication of a notice that, so far as “existing contracts” were concerned, was positively misleading. The Government was, in a sense, hoist with its own petard of secrecy. Once the decision had been made not to announce the Guidelines, the Government could not say that “existing contracts” meant pre-December 1984 contracts without disclosing the existence of the guidelines.

D1.150 A publication in ‘British Business’ or some similar journal was not, however, the only means, bar a formal announcement, by which individual companies could be made aware of the substance of the new Guidelines. Companies with existing or intended export businesses to Iran or Iraq could be expected to have discussions from time to time with DTI officials regarding the prospects of export licence applications. In the course of those discussions an indication of the substance of the Guidelines could, without indicating the actual existence of the Guidelines, be given. In that way knowledge in business circles of the substance of the Guidelines could gradually be acquired. *173 It is, however, difficult to regard that somewhat haphazard means of dissemination of the information that exporting companies would need to know as being an adequate substitute for a clear statement of the substance of the new Guidelines.

D1.151 During the course of 1985 a number of Parliamentary Questions regarding the Government’s defence sales policy for Iran and Iraq were asked. The first of these was a question put by Mr Latham MP on 16 April 1985 to the Foreign Secretary. After asking about an “arms embargo” he asked “whether the Secretary of State will make a statement on his policy in this matter”. The answer, given by Mr Luce, was that “The United Kingdom is impartial in the Gulf conflict and supplies no items of defence equipment to either side which might significantly prolong or exacerbate the conflict”. Mr Luce added that “we do not believe an arms embargo would be an effective method of ending this conflict ....” *174 He did not disclose the four guidelines that had been agreed by the three departments and approved by the Prime Minister and Cabinet OD the previous December and that were currently being applied by the departments. His answer revealed a part of Government policy on defence sales but not the whole. In omitting any reference to the “existing contracts” exception in guideline (ii), the answer given was inaccurate and potentially misleading. Non-lethal defence equipment required to be supplied under existing contracts was to be allowed to go notwithstanding that the equipment might “significantly enhance”. In revealing only a part and not the whole of Government policy on defence sales to Iran and Iraq Mr Luce adhered to the Government decision to refrain for the time being from making a public announcement of the Guidelines. It is to be borne in mind that Mr Luce had been in favour of an immediate public announcement but other arguments had prevailed.

D1.152 On 24 April 1985 another Parliamentary Question was put to the Foreign Secretary, this time by Mr Merlyn Rees MP. The question was in similar terms to that put by Mr Latham. The answer was in identical terms *175 to that given to Mr Latham.

D1.153 The two questions in April 1985 received written answers. On 22 May 1985, however, an oral question was put to Mr Luce by Mr Cyril Townsend MP. Mr Townsend referred to the recent dispatch to Iran of the two Yarrow Ships and asked Mr Luce to confirm the Government’s position of neutrality in the Gulf War. Mr Luce, in reply, said that he could confirm “that it remains firmly our position that we shall not sell defence equipment that can in any way prolong or exacerbate that war”. He said that the Yarrow Ships “cannot be used in the war between Iran and Iraq and are principally for disaster relief”. The substitution of “in any way” for “significantly” disqualifies Mr Luce’s answer from being an accurate statement of guideline (iii). But, even if that fairly minor discrepancy is glossed over, the truth of the matter was that the risk of the ships being used in the war had at all times been appreciated by the Government. *176 Guideline (ii) had been particularly designed to allow pre-Revolution Iranian contracts that did not involve lethal equipment to be completed. The contract relating to the Yarrow Ships was one such contract. If the ships had not been covered by guideline (ii), the export licence would have been refused. Sir Stephen Egerton, in his oral evidence agreed that this was so. *177 A frank answer to Mr Townsend’s question would have said that the ships were not “lethal equipment”, had potential for use in the war but were the subject of a long- standing contractual commitment and that in accordance with guideline (ii) the supply had been approved. It is ironic that although one of the main purposes of the Guidelines was presentational, and although the difficulties of explaining decisions made in respect of the pre- Revolution Iranian contracts had been a leading factor in the decision to adopt the Guidelines, nonetheless when a question was put that queried the supply to Iran of the Yarrow Ships, the Guidelines were ignored.

D1.154 Finally, in answer to a Parliamentary Question put by Mr David Steel (as he then was), on 29 October 1985 Lord Howe informed Parliament of the Guidelines. Mr Steel had asked for a “statement on the policy of Her Majesty’s Government governing the exportation of armaments to Iraq”. Lord Howe’s reply was as follows:

“The United Kingdom has been strictly impartial in the conflict between Iran and Iraq and has refused to allow the supply of lethal defence equipment to either side. In order to re- enforce our policy of doing everything possible to see this tragic conflict brought to the earliest possible end, we decided in December 1984 to apply thereafter the following set of guidelines to all deliveries of defence equipment to Iran and Iraq.” *178

The four guidelines were then set out.*179

D1.155 It may be noticed that in this answer Lord Howe referred to the Guidelines as a reinforcement of the Government’s policy to bring the Gulf War to the earliest possible end. In the context of the answer as a whole Lord Howe was, as clearly as can be, publicly stating that it was Government policy to apply the Guidelines to all deliveries of defence equipment. Lord Howe’s answer had been prepared in draft by Mr Collins and approved by Mr Day and Mr Egerton (as he then was). Mr Collins’ Background Note said that Mr Steel’s question was “probably prompted by press articles in September about the release of armoured vehicle spares to Iran ...” and that the question would provide “a good opportunity to present the Guidelines in full to the House”. The Note continued: “It will also be useful to have registered the elements in the guidelines about existing contracts and obligations against the likely event that Mr Steel will ask further questions specifically related to armoured vehicle spares.” Mr Day’s comment on the draft was: “This is a useful peg for the publication of the full guidelines. Ministers agreed at the time that they should be allowed to ‘trickle out’ in order to minimise controversy”. Mr Egerton agreed but warned that the answer would “pave the way for many follow up questions.” *180

D1.156 A number of witnesses who gave evidence to the Inquiry were asked why it was that when the April and May Parliamentary Questions were answered the opportunity was not then taken to inform Parliament about the Guidelines. They were asked what it was about Mr Steel’s question that had elicited the information. None of the answers proffered by the respective witnesses seemed to me either acceptable or logical save, of course, that a decision had been taken the previous December at Ministerial level that no formal announcement of the Guidelines would be made. Mr Collins’ explanation was that there had been no “natural point” at which to inform Parliament until Mr Steel’s PQ in October. There was, however, nothing he could point to that made Mr Steel’s question more of a “natural point” than was Mr Latham’s question. *181 Sir Stephen Egerton was of the opinion that it would have been better had the announcement of the Guidelines been made promptly but he said also that he regarded the answer given to Mr Latham as a “pretty forthcoming answer” to a “routine question”. The answer to Mr Townsend he described as “factual” rather than forthcoming. *182 Lord Howe justified the less than full answers given to Mr Latham, Mr Rees and Mr Townsend in contrast to the eventual full answer given to Mr Steel as being “part of the general process of informing Parliament and the rest of the world in a manageable fashion of where policy actually lies.” *183

D1.157 In written comments made in July 1995 Lord Howe gave an explanation for the delay until October 1985 in the announcement of the Guidelines which stressed the “very real pressures exerted by the need to safeguard British foreign and commercial relations.” He said:

“The existence of valuable trade contracts and the release to Iran of the two Yarrow ships influenced the timing of the announcement. Even from a purely trade viewpoint, immediate disclosure of the Guidelines, in particular Guideline (ii) would have provoked criticism from our Middle Eastern allies and pressure to curtail all exports to Iran (even those covered by existing contracts dating back to the 1970s). If the Government had felt obliged to give in to that pressure, that in turn might have exposed the Government to claims from British exporters for substantial compensation and have damaged commercial relations with Iran for the future. After the export of the two Yarrow ships, we had much less to lose.” *184

As an explanation of why it was that when the April and May PQs were answered the opportunity was not taken to inform Parliament of the Guidelines, Lord Howe’s points made in the passage cited above are, to my mind, no easier to accept than the previous explanations. First, the Yarrow ships were exported to Iran on 29 March and 5 April 1985. *185 Lord Howe’s suggestion that the announcement of the Guidelines needed to be delayed until after the export of the ships cannot explain why the Guidelines were not announced in the answers to PQs given on 16 April, 24 April and 22 May. Second, the “very real pressures” to which Lord Howe referred were as much present in October 1985, when the Guidelines were announced, as in April and May when they were not announced.

D1.158 I do not believe that the correct identification of the reasons why the Guidelines were not announced in full until 29 October 1985 and why the opportunity was then taken to announce them is difficult. The reasons appear clearly enough from the contemporary documents. An announcement of the Guidelines in December 1984 would have had two disadvantages. First, it would or might have exposed the Government’s intention to allow the pre-Revolution Iranian contracts to be completed save to the extent that they comprised ‘lethal’ equipment. The non- lethal equipment was to be allowed to go. Arab reaction to this might have been unfavourable. In particular, adverse reactions from Saudi Arabia were feared. It was not, in my opinion, a coincidence that the answers given to the April and May Parliamentary Questions disclosed the gist of guideline (iii) but not of guideline (ii). By 24 October 1985, however, the Yarrow ships had been delivered and criticism of the Government arising out of the exports to Iran of armoured vehicle spares was anticipated. These spares were the subject of an IMS pre-Revolution Iranian contract. It was at this point convenient and desirable to place guideline (ii) on public record so as to provide a means for responding to any such criticism.

D1.159 Second, an announcement would, or might, have drawn public attention to the extent to which defence-related exports had been going and were intended to continue to go to Iraq. Public opposition in this country might have been embarrassingly vociferous, particularly in view of the use by Iraq of chemical weapons which had recently been confirmed.

D1.160 All witnesses, whether officials or Ministers, readily accepted that there was a general principle to which Ministers and government spokesmen ought to adhere under which answers to Parliamentary Questions and statements to Parliament were required to be factual, straightforward and unambiguous. This includes “the duty to give Parliament and the public as full information as possible about the policies, decisions and actions of the Government and not to deceive or mislead Parliament or Public.” *186 Sir Robin Butler, Cabinet Secretary since 1988, said in his written evidence to the Inquiry that “The Government should always give as full information to Parliament as is possible and should take care (save in the most exceptional circumstances ....) not to give a false or misleading answer. Answers should also be sufficiently full to avoid giving a misleading account of an issue”. He then referred to exceptions to the general principle: “... there is often, particularly in international affairs ... a public interest in not disclosing some information”.

D1.161 The answers given to Mr Latham, Mr Rees and Mr Townsend in April and May 1985 did not, in my opinion, comply with these principles. The postponement until 29 October 1985 of the announcement of the Guidelines, too, cannot in my opinion, be reconciled with these principles. It should be noted, however, that no complaint, or indeed any comment at all, was made in Parliament about the delayed announcement of the Guidelines. *187

D1.162 A sustained defence of the postponement of public disclosure of the Guidelines until October 1985 and of the limited nature of the answers to PQs given by Mr Luce in April and May 1985 has been offered by Lord Howe. In his statement to the Inquiry dated 14 February 1995 he referred to the likelihood that knowledge of the British Government’s intention to allow the fulfilment of the pre-war Iranian contracts would provoke opposition in the neighbouring Arab states and said that “it was particularly important to avoid that risk until we had got ‘over the hump’ of releasing the long delayed and substantial item of the two Yarrow ships - an extremely expensive order to cancel and one that had been and was of major importance to the struggling British ship industry. *188 It was for the sake of balancing these conflicting British interests - and not for reasons of political or administrative convenience - that [Mr Luce’s] answers were justifiably left incomplete” (paragraph 23). Lord Howe made the general points, also, that: “...never before had any Guidelines.... previously been published by any British Government. Nor was any other government doing so at this time. At every stage, it was therefore essential to avoid so far as possible the risk of conferring any advantage (political or commercial) upon those other countries or their competing industries” (paragraph 24).

D1.163 It is, of course, the duty of Government to balance the public interest in favour of full disclosure of information against the public interests that might be adversely affected by full disclosure. The duty must often be one that it is very difficult to discharge. Lord Howe expressed the view that “in the past on this issue the balance has always, time and time again, come down against any disclosures. On this occasion, for the first time, the balance had come down in favour of partial disclosure”. I find myself unable to accept the accuracy of Lord Howe’s analysis. I agree that the main reason why the Guidelines were not immediately announced in December 1984 was the fear of diplomatic and trade repercussions, adverse to British interests, with Iran’s Arab neighbours. But on my reading of the basis on which the decision to announce in October 1985 was taken, it was the political advantage of being able to use the Guidelines publicly to defend the export to Iran of armoured vehicle spares, rather than the constitutional importance of disclosure to the public, that tipped the balance.

D1.164 Moreover Lord Howe does not seem to have been quite right in suggesting that this was the first time that the balance had come down in favour of partial disclosure. Mr Waldegrave provided the Inquiry with a helpful list entitled ‘Defence-related export controls, their publication, and their management, in relation to a number of countries’. *189 This showed that “there has ....been a variety of practice in relation to the announcement of policy.... If there are very rare applications for a particular market, doubtless direct contact with a small number of firms is enough; for a richer market with more British connections more may be needed, up to a Parliamentary announcement”. Mr Waldegrave consequently concluded that the research, carried out by FCO officials and his own memory showed that there was “nothing unusual at all in the way Ministers and officials handled Iraq and Iran since 1984; no one would have thought it odd that we moved in 1984-85 from a regime with no guidelines, to one with unpublished guidelines, to one with published guidelines....”

D1.165 The obligation of Ministers to be forthcoming with information in answer to PQs about their departments’ activities lies, in my opinion, at the heart of the important constitutional principle of Ministerial accountability. The public interest in a full discharge by Ministers of this obligation should be a constant heavy weight in the balance to which I have referred. Throughout the period that the Inquiry has had to examine, (1984 to August 1990), there is to be found, in my opinion, a consistent undervaluing by Government of the public interest that full information should be made available to Parliament. In circumstances where disclosure might be politically or administratively inconvenient, the balance struck by the Government comes down, time and time again, against full disclosure. *190 The decisions regarding the announcement of the Howe Guidelines are an example of this tendency.

Endnotes
*164 - FCO/2.4.9 paragraph 2 of the Summary Record

*165 - DTI/39 (A1).1704. “British Business”was a periodical published by the DTI (until 1989) with a wide, although specialised, circulation in the United Kingdom

*166 - DTI/39 (A1).1710

*167 - DTI/39 (A1).1711

*168 - DTI/39 (A1).1724-25

*169 - DTI/39(A1).1726 Letter from FCO dated 24 January 1985

*170 - The final text read: “this action is being taken in accordance with the Government’s policy of strict impartiality in the continuing conflict in the Gulf. The Government are concerned to ensure that no defence equipment should be supplied which might prolong or exacerbate the conflict. Careful scrutiny of all applications to export defence equipment to Iran and Iraq is part of this process.” (DTI/39(A1).1738)

*171 - DTI/39 (A1).1726

*172 - DTI/39 (A1).1732

*173 - see Mr Beston: Transcript, Day 41, 22 November 1993, p.154 and Mr Clark: Transcript, Day 49, 13 December 1993, p.97

*174 - see House of Commons Hansard: 16 April 1985 Col 131

*175 - see House of Commons Hansard: 24 April 1985 Col 446

*176 - In a Note dated 13 February 1981 to Mr Lamport (MED), Mr F Burrows, Legal Counsellor said that the Yarrow Ships “appear to be intended solely for the use of the Armed Services, and it sounds as though they are designed to land troops, tanks and other military equipment on a beach head, or to take them off again” (FCO/150.34). See also Mr Burrows Note of 14 May 1981 to Mr Mallinson of the Law Officers Department (FCO/150.46)

*177 - see the transcript of Sir Stephen Egerton’s oral evidence, Day 11, 15 June 1993 pp 61, 62

*178 - see House of Commons Hansard: 29 October 1985 Col 46

*179 - Guideline (iii) as announced by Lord Howe stated “We should not, in future, approve orders for any defence equipment which, in our view, would significantly enhance the capability of any side to prolong or exacerbate the conflict.” (emphasis added: cf Lord Howe’s minute dated 4 December 1984)

*180 - FCO/2.3.308-309

*181 - It should be noted that Mr Collins had recommended in October 1984 that the Guidelines should be announced publicly, had not been involved in advising Mr Luce on the PQs in April and May 1985 and had drafted the full answer given by Lord Howe to Mr David Steel on 29 October 1985

*182 - see the transcript of Sir Stephen Egerton’s oral evidence, Day 11, 15 June 1993 p.59

*183 - see the transcript of Lord Howe’s oral evidence, Day 54, 12 January 1994, p.121

*184 - Lord Howe’s written comments dated 3 July 1995, paragraph 64

*185 - These dates were confirmed by a letter dated 22 September 1995 from the MOD

*186 - see Questions of Procedure for Ministers: paragraph 27 of Annex 4 at p. 14 to the submission to the Inquiry from the Association of First Division Civil Servants dated 9 November 1993 (PP/14). (See also the Government’s response to the Seventh Report from the Treasury and Civil Service Committee: Command 9841 cited at paragraph 2 of the Armstrong Memorandum dated 2 December 1987): see also paragraph D4.57 infra and Chapter K8.

* 187 - This point was made by Lord Howe (see paragraph 21 of his comments on the draft Report submitted on 1  February 1995) and by Sir Richard Luce (see p. 4 of his comments on the draft Report submitted on 8  February 1995).

*188 - But see paragraph D1.157 supra

*189 - Annex B to Mr Waldegrave’s written statement dated 8  September 1993

*190 - For a further discussion see paragraph D4.42 et seq.

* The Full report is available from The Stationery Office Ltd., PO Box 276, London, SW8 5DT.