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 - (viii) Power Drives

D2.194 At an MODWG meeting on 6 March 1985 one of the items for discussion was the sale by Marconi to Engesa, a Brazilian company, of PD700 Power Drives intended to be incorporated into armoured vehicles for onward sale to Iraq. The Power Drives would power the gun turrets of the vehicles. The sale had been the subject of a Ministerial submission by the FCO in 1984 as a result of which Marconi’s ELA had been refused. Defence Sales wanted the question re- examined. The matter was brought before the IDC at its meeting on 27 June 1985. The Summary Record records that “Marconi had appealed against a rejection of an export licence for power drives to Iraq via Brazil. Military advice indicated that the power drives would be used to power 200 APCs [Armoured Personnel Carriers] and would thus significantly enhance Iraq’s capability. The Defence Sales Organisation noted that this could have commercial repercussions in our trade with Brazil and agreed to provide an assessment in conjunction with DTI.” *287 A Note dated 4 July 1985 from Mr Sansum, ARMD4c, to Mr Lavender (Sec (D Sales)) challenged the MODWG assessment of significant enhancement. He said that “whilst power drives obviously improve gunnery efficiency any enhancement in this respect is surely insignificant when set against the supply of the vehicles themselves. Even here the numbers involved are not particularly significant when set against the vehicles already possessed by Iraq and the supply in this case is in fact APCs not AFVs [Armoured Fighting Vehicles] with the guns themselves being used for defensive purposes - against air attack” *288 Mr Sansum called for the question of supply of the Power Drives to be re-examined and asked to attend the MODWG meeting which would deal with the question. Mr Sansum attended the MODWG meeting held on 9 August 1985 and made a case for approval of the supply of the Power Drives based, first, on the ground that Iraq would, in any event, obtain the APCs from Engesa with or without the UK Power Drives, and, second, on the adverse implications for Brazil/UK trade if the export were to be barred. The military view was that the “enhancement which the power drives would provide to Iraqi capability was... a borderline one, although the increase in the effectiveness of the vehicle offered by the equipment was undoubted.” *289 It was agreed that Mr Sansum would attend the next IDC meeting and put the commercial case for approval of the export. The gist of the MODWG discussion was put to the Minister (DP) by Mr Lavender in a Note dated 14 August 1985. Mr Sansum argued his case at the IDC meeting on 15 August 1985. He was supported by the DTI representatives, but “FCO pointed out that Mr Luce had already taken a negative view on power drives for Armoured Fighting Vehicles but not for APCs.” *290 It was agreed that the question should be put to FCO and MOD Ministers.

D2.195 On 16 September 1985 Mr Sansum provided Mr Lavender with a Note arguing the case for approval of the export to Brazil of the Power Drives. In paragraph 1 of the Note he said that the Power Drives were “to be used to power Oerlikon anti-aircraft guns mounted on an armoured chassis, an essentially defensive weapon.” *291 In paragraphs 2 and 3 he referred to the damage that a refusal of the ELA might cause to United Kingdom trade with Brazil. “Defence Sales”, he said, “currently represent some 20% of our total exports to Brazil”. In paragraph 4 of the Note Mr Sansum said that the IDC “following a re-assessment of the significance of the equipment to the Iran/Iraq war [were] now prepared to recommend that a licence should be granted...” This last sentence seems a substantial over-statement of the IDCs’ position, as recorded in the Summary Record of the meeting on 15 August 1985. On 21 October 1985 Mr Lavender prepared a draft submission to be put up to the Minister (DP) on the subject. The draft submission referred to the MODWG’s assessment of a “borderline” enhancement of Iraqi capability, stressed the commercial arguments in favour of approval of the sale and was circulated to MODWG members. The operational expert, D. Cts Staff (ROW1), confirmed that in his view, “given the vast quantities of Iraqi weaponry mounted on armoured vehicles (5000 tanks, 3500 armoured fighting vehicles, 1000 guns), the provision of 200 Power Drives, whether to control anti-aircraft or anti-tank guns, on Engesa vehicles, would not amount to a significant enhancement of Iraqi capability.” *292 In his Note dated 29 October 1985 to Mr Lavender, D Cts Staff (ROW1) commented that “It is a point for consideration that the current guidelines will generally permit sales of most non-lethal equipment to Iraq, since the quantities will rarely be sufficient to significantly enhance capability. The opposite is true for Iran, which is why our policy will be seen in practice to favour Iraq.” The comment was a fair and pertinent one. However the complementary policy of impartiality and even-handedness would normally have been expected to have avoided any great imbalance between defence supplies to Iraq and defence supplies to Iran.

D2.196 On 3 January 1986 Mr Lavender put up a submission on the Power Drives issue to the Minister (DP), Mr Lamont. The submission incorporated the assessment which had been made by D. Cts Staff (ROW1) and contained the DESS recommendation “that a clear case for agreeing supply has been made on commercial grounds because of the scale of our components trade with Brazil, while the enhancement which would be provided to Iraqi capability is not sufficient to represent a breach of the guidelines.” *293 Mr Lavender provided the Minister with a draft of a letter to be sent to his counterpart in the FCO, Mr Renton. Mr Lamont wrote, accordingly, a letter dated 30 January 1986 to Mr Renton.

D2.197 The IDC, at its meeting on 11 February 1986 in advance of any response by Mr Renton to Mr Lamont, recommended approval of the sale. Mr Renton was advised by FCO officials to agree, *294 and, did so. *295

D2.198 Marconi’s ELA for the export of the Power Drives to Brazil for incorporation into APCs for Iraq was, accordingly, granted. *296

D2.199 It is convenient to note that in October 1986 the MODWG assessed the supply to Iraq of Ground Power Units for use with helicopters as representing an insignificant enhancement. The supply was approved. *297 In addition, an application for ECGD cover for the contract was approved. *298

Endnote
*287 - see MOD/8.2.195 at paragraph 7

*288 - see MOD/8.2.271

*289 - see MOD/8.2.319 at paragraph 2(a)

*290 - see MOD/8.2.333 at paragraph 8

*291 - see MOD/8.2.441

*292 - see MOD/8.3.7

* 293 - see MOD/9.1.15

*294 - see FCO/2.4.206 at 207

*295 - see FCO/2.4.201

*296 - see MOD/9.2.207 at paragraph 12

*297 - see MOD/10.2.5

*298 - see ECG/13.4.(Folio 132) and ECG/13.4.(Folio 133)

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