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 2 Applications of The Guidelines in the period
December 1984 to August 1988

Excerpt:
Specific Cases - (iv) Small Boats

D2.148 At the first IDC meeting, on 5 December 1984, agreement was reached that licences for the export of 95 foot patrol craft to Iran should not be granted but a discussion took place as to whether export licences were required for smaller craft and whether the possession of such craft would “enhance” Iranian capability. *219 The topic was discussed at the MODWG meeting held on 13 December 1984. It was decided that representations should be made to the DTI to the effect that vessels below 12 metres in length and without weapons or provision for weapons should not be made export licensable, but that larger vessels should be licensable and should not be licensed for export to either Iran or Iraq. *220 At the next IDC meeting, on 18 December 1984, the MODWG opinion was given. The FCO however, drew attention to United States concern about the supply of any patrol craft to Iran. Their suitability for use in terrorist operations was, it seems, the basis of the concern. *221

D2.149 The licensability issue was discussed in a DTI memorandum dated 10 January 1985 submitted by Mr Stanley (SBP) to Mr Beale. *222 “Ships of War” were licensable under the then current EG(C)Os and, as a rule of thumb, a boat of less than 12 metres in length was not regarded as a “Ship of War” unless it was armed or specifically designed for offensive or defensive action. A vessel was not a “Ship of War” simply because it could be converted for use in, or used in, war. Rubber dinghies could not be “Ships of War”, even though purchased for the purpose of being used by troops in amphibious operations, and so were not licensable.

D2.150 The small boats issue was discussed again at the IDC meetings held on 8 February and 15 March 1985. At the 8 February meeting it was announced that “FCO Ministers had decided not to permit the export of any vessels which could be used for military purposes since these could exacerbate the conflict by, for example, use in terrorist operations” and that “It should be for MOD/Defence Sales to establish that vessels could not be used for such purposes. The FCO would then not object.” *223 At the 15 March meeting the “wrangle over the legal definition of ships of war, and hence over the need for export licences...” continued. *224 It was decided that “... in view of the urgency of the problem ELB [would] draw up draft amendments which could be made to the export licence regulations if it were proven that such craft might enhance Iranian capability and if Ministers agreed that such amendments were desirable.” *225

D2.151 At the IDC meeting on 27 June 1985 DTI representatives said they would be recommending their Ministers to bring under export licence control all craft over 7.5 metres in length. FCO representatives pressed, however, for all craft, regardless of length, to be made licensable “so that a decision on the desirability of the export of the craft could be decided on the merits of the individual case rather than on the length of the craft”. The MOD supported the FCO. The DTI agreed to consult with their Ministers. *226

D2.152 A DTI submission dated 11 July 1985 was, accordingly, put up to Mr Channon, the MFT. The submission recommended the Minister to agree to implement controls over craft not less than 7.5 metres in length and advised the Minister that “in the judgement of FCO and MOD the supply of small boats would assist Iran in transporting personnel and equipment to support its offensive across the marshlands of Southern Iran and in possible attempts to cross the Tigris.” *227 There were two particular potential transactions referred to in the submission; one was a sale to the Iranian Navy of 9.5 metre high speed launches; the other was a sale of 5-man and 10- man inflatable craft to Iraq. Each of the vendor companies had been warned that export control might be introduced at short notice. Mr Channon accepted the recommendation and authorised DTI officials to sign the necessary Order amending the then current EG(C)Os. The amending Order was duly signed on 12 August 1985 and brought craft not less than 7.5 metres in length under export control. At the IDC meeting held on 15 August 1985 the amending Order was referred to but “FCO reserved the right to reopen the question of the smaller boats if necessary...” *228

D2.153 At the IDC meeting held on 10 December 1985, the proposal to export the high speed launches to Iran was discussed. The MOD “stated that the export would significantly enhance Iran’s capability in the conflict and, more particularly, the boats could be used to intercept British shipping in the Gulf”. The IDC reached the “unanimous view... that the arguments against export would have to override the other considerations of employment and finance.” *229 The ELA was, therefore, refused.

D2.154 On 6 March 1986 the MOD proposed that (inter alia) all small boats should be brought under export licensing control. At about the same time a possible Iranian order for 310 inflatable boats between 4 metres and 5.8 metres in length was under discussion.

D2.155 In a letter dated 7 April 1986 to Mr Renton, Mr Clark (the MFT) said that he did not think an adequate case had been made out for extending export controls so as to cover boats of less than 7.5 metres in length. He challenged, also, the view that the 310 inflatable boats would “significantly enhance” Iran’s capability. *230 Mr Renton’s response, by letter dated 22 April 1986, emphasised the role the inflatables might play in enabling the Iranians to convey their forces across the waterways and supported the MOD assessment that the supply of the boats would significantly enhance Iranian capability to prolong or exacerbate the conflict. *231 The issue was further discussed at the IDC meeting held on 24 April 1986. The DTI officials bolstered their case for approval of the proposed export by pointing out that in 1985 a French company had sold 300 inflatable boats to the Iranians but the FCO and the MOD “argued that the point was not that others might supply, rather that British interests would be damaged if the UK did so.” *232 In May 1986 the proposed vendor, Avon Inflatables Ltd, informed the DTI that the Iranian order for 310 inflatables had been cancelled. *233 But shortly thereafter another company, Lifeguard Equipment Ltd, informed the DTI that it had been invited by the Iranians to supply inflatables under a contract worth £800,000. The DTI was requested by the MOD and the FCO to put in hand, as a matter of urgency, the preparation of the necessary amending Order to bring the inflatables under export control.

D2.156 On 19 June 1986 the meeting between Mr Renton, Mr Clark and Lord Trefgarne took place. Mr Clark suggested that, in order to maintain a proper balance between Iran and Iraq, small boats should be supplied to both countries. *234 This suggestion did not commend itself to his colleagues.

D2.157 At the IDC meeting on 24 June 1986 it was announced by DTI representatives that Avon Inflatables Ltd, had received a new order for the supply of 360 inflatable boats to Iraq. It was accepted that any decision to approve the supply of the boats, whether to Iran or to Iraq, would need to be referred to the Cabinet OD Committee. *235

D2.158 An exchange of letters between the Ministers on the small boats issue then took place. Mr Clark’s letter of 30 June 1986 to Mr Renton proposed that “we should do nothing to prevent the export of small boats to Iran and Iraq so long as the supply to each side remains broadly in balance.” 236 In his letter Mr Clark said also that he found it “difficult to accept that small inflatable boats can properly be termed defence equipment...” Lord Trefgarne in a letter dated 10 July 1986 dealt with the “defence equipment” point by pointing out that “our own forces are equipped with a variety of such boats for use in offensive tasks” and that the inflatables would “enable [the Iranians] to move some 3000 men to any part of the front irrespective of the ground condition, and would enable them to capitalise on their large manpower advantage”. Lord Trefgarne commented also, however, that the Iraqis enjoyed a major equipment advantage but had a lack of manpower, and that “the military view is, therefore, that the supply of 300 inflatables to Iraq would not constitute a significant enhancement and thus would not breach the guidelines.” *237 Mr Renton’s letter of 10 July 1986 to Mr Clark reiterated the FCO opinion that the supply to Iran should be barred and export licensing control should be extended to all small boats as a matter of urgency. *238

D2.159 At the IDC meeting on 24 July 1986 the DTI representatives said that “DTI Ministers have reluctantly accepted MOD and FCO objections to supplying boats to Iran on enhancement grounds” but, in regard to supply to Iraq, said that “the guidelines would not be breached” and that “FCO objections appeared to be only on grounds of presentational difficulties with Iran.” *239 Mr Collecott’s report to senior FCO officials on this meeting said that “the DTI have still not accepted the need for licencing (sic) of such exports.” *240

D2.160 By August 1986 Mr Clark had, apparently, accepted that all small boats would be brought under licence control. In a Note dated 1 August from Mr Beston to DTI Ministers it was said that Mr Clark had “(although this has not yet been confirmed to the FCO and MOD) agreed to bring small inflatable boats within export licensing control”. Mr Beston went on to add “A change in the law - which has not yet been made - does not of course mean that we should not continue to fight for the approval of individual exports.” *241

D2.161 Nonetheless, opposition to the extension of licensing control to cover all small boats continued to be expressed by some DTI officials.*242 In addition, the question whether the supply of inflatables to Iraq would be permitted was still to be decided.

D2.162 At an MODWG meeting held on 10 December 1986 it was decided (inter alia) that the supply of 1000 inflatable boats to Iraq would be a significant enhancement. *243 A letter dated 6 January 1987 from Mr Clark to Lord Trefgarne referred to the earlier MOD opinion that the supply of 300 inflatables would not constitute a significant enhancement, indicated that Avon Inflatables Ltd, were proposing to accept a contract to supply that number of boats to Iraq and said that “since this order would not breach the agreed guidelines, I do not in the circumstances propose to impede it, and therefore see no reason to bring small boats under export licensing control.” *244 Lord Trefgarne replied by letter dated 13 January 1987. He said that from his, i.e. the MOD, point of view he saw “no reason to impede the Avon proposals” but pointed out that there were “presentational aspects” on which Mr Renton might wish to comment. He reiterated that, in any event, the boats should be brought under export control. *245 As predicted, Mr Renton did wish to comment. By his letter dated 15 January 1987 to Mr Clark he said that in view of the earlier refusal to approve the supply of inflatables to the Iranians, to allow Avon to export 300 inflatables to Iraq “would be difficult to square with our impartiality in the conflict.” *246

D2.163 By February 1987, the licensing issue was, finally, laid to rest. In a letter dated 5 February 1987 to Mr Renton, Mr Clark said that “Although I continue to find the proposal unattractive, I have decided to proceed with an amendment to the [EG(C)O] to bring [small boats below 7.5 metres] under control.” *247

D2.164 In March 1987 Avon Inflatables Ltd received a new order from Iraq for 200 inflatable boats. Mr Diston of ELB advised the company that “there was some chance of a licence being granted” (but n.b. export licensing control had still not, formally, been extended to cover these boats). In a Note dated 8 May 1987 to Mr Beston, Mr Diston suggested “A ministerial exchange on the subject of Avon’s order could be a useful vehicle to smoke out FCO’s ideas of widening the Guidelines to include ‘political factors’ as a basis for refusing export licences.” He said that “A letter could also seek to establish how small an order for small boats for Iraq could be acceptable to FCO, if only as a basis for some off the record advice to Avon Inflatables who have suffered severely as a result of FCO attitudes to military sales to Iraq over recent months.” *248 A letter dated 14 May 1987 was, accordingly, sent by Mr Clark to Mr Renton. The letter sought FCO approval of the supply of 200 boats and expressed concern “if there were to be a further attempt to frustrate exports on grounds of presentational difficulty alone.” *249 Lord Trefgarne, in a letter dated 18 June 1987 to Lord Glenarthur (an FCO Minister) confirmed that, in the MOD view, the 200 boats would not constitute a significant enhancement and would not, therefore, breach the Guidelines. *250

D2.165 Mr Renton’s reply to Mr Clark was delayed by the general election. The eventual reply was by letter dated 13 August 1987 from Mr David Mellor, the new Minister of State at the FCO. Mr Mellor adopted and continued Mr Renton’s opposition. His letter said that “... the sale of small boats to Iraq which were previously denied to Iran, would be seen by the Iranians as a conspicuously unneutral act” and that “... if we are to retain our credibility, it is essential that no accusations of partiality can be levelled against us”. Mr Mellor’s conclusion was that “...the short term benefits in terms of local employment and commercial return of our exporting small boats to Iraq are far outweighed by the damage this could do to our wider interests.” *251 The DTI, with reluctance and regret, accepted the position. *252

D2.166 The order that Avon Inflatables Ltd had accepted for the supply of 200 inflatable boats to Iraq could not, therefore, be fulfilled.

D2.167 The “small boats” story is interesting for a number of reasons. First, it shows export control being exercised, de facto, over exports not subject to licence control. The inflatables were not formally brought under export control until nearly two years after the first export proposal had been communicated to the DTI. The companies concerned could, lawfully, have exported the inflatables at any time prior to the making of the amendment Order in the summer of 1987. Second, the export of small boats to Iran would, it was judged, represent a breach of guideline (iii). So the export was opposed. The export of small boats to Iraq, on the other hand, would not have been a breach of guideline (iii). Nonetheless the export was opposed. The FCOs’ opposition was based on the policy of impartiality rather than on the Guidelines. It was not an application of the Guidelines that barred the export to Iraq.

Endnotes
*219 - see FCO/2.4.9 at paragraph 3(c)

*220 - see MOD/8.1.11 at paragraph 2(b)

*221 - see FCO/2.4.1 at paragraph 4(iv)

*222 - see DTI/39(A1).1712 and also Mr Sanders’ Note dated 28 February 1985 at DTI/39(A1).1736

*223 - see FCO/2.4.81 at 82

*224 - see DTI/39(A1).1741

*225 - see FCO/2.4.75

*226 - see MOD/8.2.195, FCO/2.4.56 and DTI/39(A1).1761

*227 - see DTI/39(A1).1772 at paragraph 4

*228 - see FCO/2.4.47 at 48

*229 - see FCO/2.4.22 at 23

*230 - see DTI/36.941

*231 - see DTI/36.944

*232 - see FCO/2.4.192 at paragraph 4

*233 - see DTI/36.950/2

*234 - see DTI/36.955 at paragraph 3

*235 - see MOD/9.4.145 at paragraph 1(b)

*239 - see MOD/9.4.221; FCO/2.4.169

*240 - see FCO/2.4.167 at paragraph 1(a)

*241 - see DTI/36.983 at paragraph 7

*242 - see e.g. the Note dated 20 November 1986 to Mr Diston (ELB): “..we are unconvinced of the case for bringing these boats under export licensing control”. DTI/155.13350

*243 - see MOD/10.3.155 at paragraph 2(a)

*244 - see MOD/11.1.15

*245 - see MOD/11.1.167

*246 - see MOD/11.1.181

*247 - see DTI/58.4844

*248 - see DTI/36.1010

*249 - see DTI/36.1016

*250 - see MOD/13.2.13

*251 - see DTI/58.4859

*252 - see Mr Beston’s Note dated 21 August 1987 to Mr Clark and the manuscript comments on the Note; DTI/58.4861

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