Influence/Lobbying
BAE SYSTEMS uses
many avenues to lobby governments and increase its sales. Its main
advantage lies, however, in its sheer size and its ability to use
its importance to the British defence industry to its advantage.
Monopoly over
the defence industry
As has
already been explained, BAE SYSTEMS owns most of the surviving shipbuilding
capacity in Britain (see Products). As such it has the ability to
use its massive holdings to influence government procurement policy,
and to ensure the best deal for itself, rather than the taxpayer.
Despite its international aspirations, BAE uses its status as a British
company to further influence the Ministry of Defence; as the Defence
Review put it, ‘deals with the MoD tend to come wrapped in the
Union flag’.[30] Threats over job cuts and relocation are skilfully
used to ensure that BAE lands the lions share of all MoD contracts.
For instance, the MoD attempted in 1999 to break the monopoly enjoyed
by Royal Ordinance (a BAE subsidiary) over fuel supply by purchasing
propellant from a South African source. BAE reacted quickly, closing
a propellant plant near Glasgow and threatening to shut down Royal
Ordinance altogether. As a result, RO now has a guaranteed ten-year
contract from the Ministry of Defence.
This behaviour
has not gone unnoticed by other interested parties, with the chairman
of Vosper calling BAE’s behaviour ‘outrageous’, and
an article in the Spectator commenting on the ‘all-too comfortable
relationship between a public-sector customer and one giant UK provider.’[31]
Perhaps the recent dismissal of John Weston from his position as CEO
of BAE SYSTEMS indicates that BAE is worried about this criticism;
Weston had been widely criticised for ‘bullying’ the MoD,
and it was a badly-kept secret that Geoff Hoon, the Minister for Defence,
and Weston were not working well together. However, it seems unlikely
that BAE will give up all of the advantages that their near-monopoly
position gives them, simply because at the moment the MoD is in no
position to go elsewhere for their supplies, given that it is government
policy to ‘buy British’ wherever possible. At the time of
writing, nearly 85% of the MoD’s procurement went through British
companies[32], and most of that purchasing involved BAE SYSTEMS, in
one way or another.
Government
support for the defence industry
In fact, far from
reining in an out-of-control company, the British government goes
out of its way to promote and protect the British defence industry.
In BAE SYSTEMS’ case, that effort goes right to the top, with
Sir Richard Evans (Chairman of BAE) being described as ‘one of
the few businessmen who can see Blair on request.'[33] This relationship
between the company and the government is not something that is hidden,
in fact in April 2001, Dr Lewis Moonie (Under-Secretary for Defence)
informed the House of Commons that: ‘MoD has given full support
to BAE SYSTEMS’ bid to supply Hawk jets to India…the Secretary
of State for Defence and the Minister for Defence Procurement have
met with BAE SYSTEMS and the Indian Government to discuss the Hawk
proposal.’[34] According to the Guardian, The British government
subsequently mounted an intensive campaign to sell 60 Hawk jets worth
£1bn to India, in spite of the tremendous tensions in the Kashmir
area. BAE SYSTEMS has already sold Jaguar combat aircraft to India
in licensing deals the MoD refuses to disclose (see section on Corporate
Crimes).[35] In other words, the Government has not only a policy
of permitting, but also of supporting, promoting and even covering
up arms deals. BAE boasts of commanding the loyalty of over 200 MPs,
even describing them as “its” MPs.[36]
Financial
backing from the Government
ECGD
As well
as the advantages that BAE gains from its size and links to government,
the company also benefits from measures designed to make foreign investment
more secure for British businesses. The ECGD (Export Credit Guarantee
Department) underwrites many of BAE’s export contracts, meaning
that the taxpayer takes the risk of the transaction, rather than the
company. Essentially, the ECGD is there to enable companies such as
BAE to enter into high-risk and dubious sales without the risk of
large losses. It has been estimated that, in this way, the ECGD subsidises
British arms exports to the tune of £227 million annually.[37]
DESO
Another government
organisation that makes life easier for the arms industry is DESO
(Defence Export Services Organisation). Most Government support to
the arms industry is co-ordinated by DESO which has over 300 staff
and provides a range of services to the arms industry and potential
customers. These include technical and logistical support, advice
on negotiation, offset and financing arrangements, assistance to industry
in regional marketing, market research funding for exhibitions and
facilitation for military support to sales. DESOs marketing and most
military support services are provided free to industry. Net operating
costs to the MoD are £16m, according to a press briefing by
Saferworld.[38]
In addition, the
Government uses MoD personnel, as well as embassies and defence attaches
to promote arms exports. Also, the Government spends lots of money
on official visits to promote the sale of defence equipment. Official
visits by ministers and high-level delegations such as the Royal Family
are frequently used to promote the sale of defence equipment. Another
example was mentioned before; The Secretary of State for Defence met
with BAE SYSTEMS and held talks with the Indian Government this year
to discuss a BAe Hawk jet proposal. According to Saferworld, the Government's
efforts to promote arms exports cost the taxpayer £69 million.[39]
In short, BAE
hardly need to pursue a vigorous lobbying style, as the playing field
is tilted heavily in their direction already. Arms companies are heavily
subsidised by the state as it is, and BAE’s size means that it
can put additional pressure on the MoD to bend to its demands.
Tony and Dick
Whilst
exploring the world of arms exports, BBC correspondent Will Self confirmed
the existence of an intimate relationship between Tony Blair and BAE
SYSTEMS chairman Sir Dick Evans. "It's Evans, with his abrasive
style and no-nonsense salesmanship, who is widely credited with bringing
Our Tone on to the export team. Dick got Blair to write a piece for
the BAE SYSTEMS newsletter in the run-up to the 1997 election saying:
'Winning exports is vital to the long-term success of Britain's defence
industry.' He also pledged New Labour's support for the industry.
Evan's is said to enjoy the PM's ear whenever he wants."[40]
Lobbying groups
Despite its ability
to coerce the UK Government, BAE SYSTEMS also belongs to several lobbying
groups. The company is prominent in the TABD (Trans-Atlantic Business
Dialogue), which is a trans-continental business lobbying group,
which describes itself as ‘a unique business-led process launched
by the EU and US in 1995, [which] seeks to reinvigorate our economies
by increasing transatlantic trade and investment opportunities through
the removal of costly inefficiencies from excessive regulation, duplication
and differences in EU and U.S. regulation.’[41] As anyone conversant
with corporate speak will know, what this actually means is that the
TABD is dedicated to eliminating all regulation which stops profit-making
activity, regardless of its worth or importance; environmental regulations,
labour standards and nationally owned public services have all come
under attack from the TABD. Tellingly, the CEO of BAE, Mike Turner,
is to be one of two co-chairs of the organisation for this year (2002).
BAE SYSTEMS is
also a member of the International Chamber of Commerce (ICC).
This organisation describes itself as the 'World Business Organisation’,
and has similar neo-liberalist aims to the TABD.. The European based
research group, Corporate Europe Observatory, has this to say about
the ICC: 'The ICC has a long history of vigorously lobbying to weaken
international environmental treaties…Examples include the Kyoto
Protocol, the Convention on Biodiversity, and the Basel Convention
against trade in toxic waste. In all of these UN negotiations, the
International Chamber's obstructive lobbying is in direct opposition
to the Global Compact [a UN pledge for transnational corporations]
principles it has pledged to pursue.’[42]
BAE also belongs
to SBAC (Society of British Aerospace Companies), and, as by
far the largest member, exercises a lot of power. John Weston, their
ex-CEO, is currently President of SBAC. It seems unlikely that control
of SBAC is very important to BAE however, given its own direct links
to Government and the House of Commons.
The BAE SYSTEMS
website provides links to Industry Associations, Government and Defence-related
sites. See: http://www.baesystems.com/relatedlinks/relatedlinks.htm
Moving into the educational
sector
BAE SYSTEMS is
also looking after its future recruitment and ‘public relations’
by moving into the educational sector. BAE SYSTEMS has developed its
PR machine far in advance of the traditional careers fair stall and
occasional brochure. In 1998 it set up its ‘virtual university’,
which awards Certificates in Management, supported by Lancaster and
the Open University. BAE keeps expanding its 'virtual university',
which is also supported by the Engineering and Physical Sciences Research
Council (EPSRC). The EPSRC is the largest of the seven UK Research
Councils. It funds research and postgraduate training in universities
and other organisations throughout the UK.[43] The UK research councils
claim to be autonomous, non-departmental public bodies. However, they
are funded from the science budget received from the Office of Science
and Technology (part of the Government's Department of Trade and Industry).
So basically, the Government is funding research and training conducted
for arms manufacturers through the EPSRC.
In addition to
the 'virtual university', BAE SYSTEMS has partnerships of varying
natures with many other universities, cooperating with Sheffield Hallam
in the production of curriculum materials, and having research partnerships
with Cambridge, Sheffield and Southampton Universities, amongst others.
It also sends many of its young engineers back into secondary schools,
to extol not only the benefits of an engineering career, but one with
BAE SYSTEMS. In addition, the company has sponsored various events
and ‘educational’ displays, such as the Mind Zone in the
Millennium Dome, further linking its name with scientific and engineering
excellence, and avoiding its real business of manufacturing weapons
to kill people. Having capital far in excess of any other UK engineering
firm (partly because of its size, and partly because of its massive
reserves from the Al-Yammamah deal) it offers extremely rewarding
packages to the best UK engineering students, ensuring that the arms
industry continues to leech off the most promising talents in the
sector.
