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Human security and military procurement: there is an urgent requirement for careful ... pursuit of human security beyond Canada's borders.

[Part 1 of 3]

 SPOTLIGHT ON CANADIAN MILITARY EXPORTS

Selected overseas (non-US) Canadian military export contracts reported
during 1998

Supplier City, Province


Atlantis Aerospace Corp Brampton, ON

Bell Helicopter Textron St-Janvier, PQ

Bell Helicopter Textron St-Janvier, PQ

Bombardier Inc Mirabel, PQ

Bombardier Inc Mirabel, PQ

Bombardier Inc Moose Jaw, SK

Bombardier Inc Mirabel, PQ


CAE Electronics Ltd Montreal, PQ


CAE Electronics Ltd Montreal, PQ


Canadian Marconi Co Montreal, PQ

Davis Engineering Ltd Ottawa, ON

Department of Ottawa, ON
National Defence

General Motors Canada London, ON

Indal Technologies Ltd Mississauga, ON

Northern Telecom Ltd Ottawa, ON


Pratt & Whitney Canada Longueuil, PQ

SR Telecom Montreal, PQ

Simunition Technologies Ottawa, ON

Standard Aero Ltd Winnipeg, MB



Wescam Inc Flamborough,
 ON

Western Canada Vancouver, BC
Marine Group

Western Star Trucks Inc Kelowna, BC


[Part 2 of 3]

 SPOTLIGHT ON CANADIAN MILITARY EXPORTS

Selected overseas (non-US) Canadian military export contracts reported
during 1998

Supplier Military product/service


Atlantis Aerospace Corp Naval tactical simulation systems

Bell Helicopter Textron 2 Bell 230 Special Mission helicopters

Bell Helicopter Textron 2 Bell 412EP anti-submarine helicopters (1)

Bombardier Inc 10 Canadair 415GR amphibious aircraft

Bombardier Inc 3 Challenger multi-mission aircraft

Bombardier Inc Pilot training under NATO program

Bombardier Inc Aircraft logistic support and maintenance


CAE Electronics Ltd 2 PC-7 aircraft flight training devices


CAE Electronics Ltd Offshore patrol vessel management
 systems (1)

Canadian Marconi Co Rooivalk helicopter doppler radar sensors (1)

Davis Engineering Ltd Helicopter infrared countermeasure systems

Department of 10,000 rounds of 155mm artillery
National Defence ammunition

General Motors Canada 150 light armoured vehicles

Indal Technologies Ltd Helicopter recovery systems for frigates (1)

Northern Telecom Ltd Microwave signal processing chips for
 frigate active phased array radar

Pratt & Whitney Canada 120 PT6A engines for KTX-1 trainer aircraft

SR Telecom Equipment for air force

Simunition Technologies Small calibre training ammunition

Standard Aero Ltd Repair and overhaul aircraft propellers



Wescam Inc Dual sensor camera systems for
 Bell 412 navy helicopters

Western Canada Offshore patrol vessel
Marine Group

Western Star Trucks Inc 45 heavy-duty trucks


[Part 3 of 3]

 SPOTLIGHT ON CANADIAN MILITARY EXPORTS

Selected overseas (non-US) Canadian military export contracts reported
during 1998

Supplier Contract value Recipient(s)


Atlantis Aerospace Corp $24.3 million Saudi Arabia

Bell Helicopter Textron $9 million (2) Ecuador

Bell Helicopter Textron $20 million (2) Ecuador

Bombardier Inc $380 million Greece

Bombardier Inc $60 million (2) Denmark

Bombardier Inc $250 million Denmark

Bombardier Inc Not reported Middle East
 countries

CAE Electronics Ltd $14.4 million United Arab
 Emirates (UAE)

CAE Electronics Ltd $10 million Brunei


Canadian Marconi Co Not reported South Africa

Davis Engineering Ltd $11.4 million Turkey

Department of Not reported Turkey
National Defence

General Motors Canada $230 million Australia

Indal Technologies Ltd $10 million Spain

Northern Telecom Ltd $134 million Germany,
 Netherlands

Pratt & Whitney Canada $120 million (2) South Korea

SR Telecom Not reported Brazil

Simunition Technologies Not reported UAE

Standard Aero Ltd Not reported Colombia,
 Egypt, Jordan,
 UAE

Wescam Inc Not reported Ecuador,
 Venezuela

Western Canada $51 million Ireland
Marine Group

Western Star Trucks Inc $10 million Kuwait


Source: Canadian Military Industry Database (Project Ploughshares)

(1) Subcontract

(2) Estimated contract value


Canada's military contracting and procurement policies need to be reviewed to make them consistent with a human-security-based defence policy. Project Ploughshares' submission to the House of Commons Standing Committee on National Defence and Veterans Affairs, presented on 27 May 1999, outlines four broad policy areas in which changes are needed.

We welcome this opportunity to draw to the attention of the Committee four broad policy areas that are closely linked to defence contracting and procurement policy, and which we believe would benefit from further review and amendment. These include:

* the basic Canadian defence policy and the roles which capital equipment acquisitions are intended to support and advance;

* the level of resources devoted to Canadian military capability in the context of resources available for other measures to support Canada's human security objectives;

* Canada's military industry and trade in relation to the United States; and

* the overall export dependence of Canada's military industry and the implications for Canadian military export regulations.

Our review of these four related policy areas leads us to offer the following recommendations:

* that Canada undertake a thorough public review of its defence policies and roles outside North America in light of the human security doctrine and peace-building objectives advanced by the Department of Foreign Affairs and International Trade (DFAIT);

* that, as a matter of high priority, Canada reverse the decline in official development assistance and articulate a clear plan for meeting the stated objective of bringing Official Development Assistance (ODA) funding to 0.7 per cent of GNP;

* that Canada require licensing of all Canadian military exports to the US; and

* that the Canadian military export control system be strengthened

- to ensure the strict application of controls on military commodity transfers to countries engaged in serious human rights violations and to countries in armed conflict;

- to incorporate other control provisions promoted by the international arms transfer Code of Conduct proposed by the group of Nobel Peace Laureates; and

- to ensure that military export controls apply to dual-use systems intended for military end-users.

Human security and defence policy

The term "human security" (1) will be familiar to the Committee. And the point of the term is not to imply that before it was invented defence and security were not about protecting people. Rather, emphasis on the "human" elements of security is meant to redress an imbalance in security preoccupations - that is, where disproportionate attention is paid to military support for state structures, ideological orthodoxy, and regime survival at the expense of the security of persons. (2) A human security focus is on the well-being and safety of people, which are necessarily rooted in favourable social, political, and economic conditions. (3) As such, the term has special relevance for states in which the basic or minimal conditions for the safety of persons and a sustainable social order are fragile and where violent conflict is threatened.

By the end of the 1980s, both the International Monetary Fund and the World Bank had concluded that excessive military spending seriously undermines development and human security in that it consumes scarce resources, promotes a culture of control, aids repression, and prevents democratization. That recognition led to efforts to encourage reductions in military spending, and particularly to explorations of possibilities of using aid to induce reductions (Ball 1992). Canada has supported these efforts, including the hosting of an Organization for Economic Co-operation and Development (OECD)/Development Assistance Committee symposium in Ottawa in March 1997 (OECD 1998).

Another fundamental insight of the idea of "human security" is the recognition that when basic political, economic, and social conditions essential to the well-being of persons are absent, military force cannot in the long term ensure stability, maintain order, or "enforce" peace. Ultimately, peace and security are not the product of enforcement, but the product of consensus and consent based on human development.

Perhaps the most radical element of `human security," and the element most relevant to defence policy planning, is not that humans should be the primary objects of state security policies, but rather that states have an obligation to serve the welfare of persons, wherever they are (not only their own citizens). For example, when people are vulnerable in southern Sudan, we have an obligation to seek their safety (e.g., Canada has put the issue of protection of people in the midst of conflict, especially children, on the agenda of the Security Council).

While most of the security problems that are reflected in intrastate warfare are the result of the absence of "human security" and are thus not particularly amenable to military remedies, military forces have important roles to play in support of human security. Such roles relate especially to the protection of vulnerable populations where human security is absent, and in enforcing compliance with international agreements and standards. When states fail utterly in the provision of human security, and when chaos then ensues, such states are, in effect, in need of external military aid to the civil authority, in addition to other non-military assistance.

However, the theoretical identification of such roles, as the current experience in Yugoslavia tragically illustrates, is not the same as carrying them out effectively. There is an urgent requirement for careful and extensive exploration of roles and capabilities appropriate to an effective contribution by the Canadian Armed Forces to the pursuit of human security beyond Canada's borders.

The level of combat capability required for such roles, and which Canada is likely to muster, is a matter of continuing debate - a debate which the 1994 White Paper tried to settle but did not. As other testimony before this Committee has suggested, DND's current capital budget is sufficient to maintain a low level of capability across a wide range of military capabilities or a high level of capability across a limited range. It is not sufficient, nor is there any reasonable prospect that it will ever be sufficient, to procure or maintain a high-level, fullspectrum combat capability for independent power projection operations.

Such a capability is possessed only by the United States and, to a much lesser degree, great power contenders such as the United Kingdom. The costs of such a capability are far beyond those that Canada can afford. According to NATO statistics of equipment spending (a subset of capital spending), the US equipment budget in 1997 was approximately $105-billion Canadian or $68,000 per soldier. The equipment budget of the UK was approximately $12.7-billion or $58,000 per soldier. These figures are illustrative of the level of spending required for a full-spectrum general-purpose combat capability. Canada's equipment budget of $1.4-billion ($22,800 per soldier) compares well with Germany's $5.0-billion ($14,800 per soldier) or Italy's $3.5-billion ($8,400 per soldier), but it is obviously insufficient to maintain armed forces capable of projecting all forms of combat capability in operations independent of its allies.

DND itself recognizes this fact and does not attempt to maintain a full-spectrum, general-purpose combat capability. As 1994 Defence White Paper notes, "the decision to retain combat-capable forces should not be taken to mean that Canada must possess every component of military capability." The white paper does, however, call for the maintenance of "multipurpose, combat capable" air, land, and maritime forces possessing a wide range of military capabilities. Even this more limited goal therefore confronts Canada with the trade-off between maintaining a broad range of military capabilities at a largely token level and choosing a few things to do well.

Recommendation: The 1994 Defence White Paper is not a sufficient guide to those roles and capabilities; thus a new and thorough review of Canadian defence policy is required. Such a review should in particular be focussed on exploring how best to align the international roles (4) of the Canadian armed forces with the imperatives of human security articulated and advanced by DFAIT, (5) exploring in particular a defence capability designed less to participate in high intensity combat environments and oriented more toward peacekeeping and humanitarian interventions in low-intensity combat environments.

Canadian security spending trends

How much military capability does Canada need? How much military spending is enough? Of course, there is no objective answer to that question. The possible roles and capabilities are almost limitless, and security planners would have little difficulty in defining needs and assigning commitments to a Canadian force funded at triple the current levels. The US military, which alone accounts for 35 per cent of the world's military expenditures, finds itself insufficiently funded to accomplish all the tasks it has defined as desirable.

Setting appropriate levels of security spending is obviously a political task that must find a balance among a broad range of competing needs and requirements, and that must build and determine the level of political will to fund public programs. Furthermore, even within the security spending envelope it is necessary to make choices between military spending and support for non-military programs that build the social and political conditions conducive to stable and secure communities.

It is now widely accepted that Canadian military spending, including capital spending, is not likely to grow noticeably in the near future. It has declined significantly from its peak at the end of the 1980s, but in fact the current DND budget is, in absolute terms, not low by Canadian historical standards. After allowing for inflation, DND's Fiscal Year 2001-02 budget of $10.2-billion will remain approximately 8 per cent higher than its FY 1980-81 budget, i.e., at or above the high end of Canadian spending during the "detente" period of the Cold War (see Figure 1).

Furthermore, the decline in Canadian military spending that took place during the 1990s occurred in the context of a much deeper decline in worldwide military spending. As a result, the percentage of world military spending represented by Canadian military spending continued to grow throughout the first half of the 1990s (see Figure 2). Even today, after several additional years of DND cutbacks, this percentage probably remains higher than 0.95.

The picture is broadly similar in capital spending. Canadian capital spending has declined significantly from the level it reached during the period 1986-87 to 1995-96 - the peak period for post-Second World War Canadian military spending - when it averaged $2.63-billion per year, representing 20.1 per cent of the total military budget and $32,200 per soldier per year (all figures in 1999 dollars). Capital spending during the period from 1999-2000 to 2001-02 is projected to average only $1.99-billion per year. This level will still represent 19.1 per cent of the total military budget, however, and funding per soldier will actually increase to $33,200 per year.

It will remain considerably higher than the 1980-81 level of $1.4 billion, which represented only 14.7 percent of the total military budget and $16,900 per soldier (see Figures 3 and 4). (6)

In fact, the relative military capacity of Canada and its OECD partners has grown noticeably since the end of the Cold War, moving from 51 per cent of global military spending to 63 per cent by the mid-1990s.

Non-military security spending has fallen considerably more than military spending. From FY 1989-90 to FY1999-2000, Canada's Official Development Assistance declined by 37 per cent in real terms, compared with cuts of about 18 per cent to Department of National Defence spending. Globally, by 1997 the developed countries in the OECD had reduced both their post-Cold War aid and military spending by 17 per cent. During the first half of the 1990s Canadian aid to the 48 least-developed countries declined by a third - put another way, Canadian human security assistance to the least secure countries dropped by one third. (7)

Recommendation: In the context of a review of security policy and funding, in the context of a foreign policy emphasis on human security, and given the fact that current wars are primarily intrastate armed conflicts in states incapable of meeting the human security needs of their people, it is urgent that Canada explore ways of increasing its contribution to human security measures. This requires a reassessment of the relative levels of military and other forms of security spending, and the exploration of increased human security funding by restoring ODA spending and by increasing the funds earmarked for peacebuilding.

Canada/US defence trade

From the early years of World War II, Canada's military industry has relied heavily on the US market, with Canadian access to that market institutionalized through the Defence Production Sharing Arrangements (DPSA) entered into in 1959.

In 1987 the North American Defence Industrial Base Organization was established with a secretariat based in Washington. Recently renamed the North American Technology and Industrial Base Organization, the NATIBO is charged with promoting integrated defence industrial preparedness within the US and Canada by increasing the access of one nation to the military industry of the other.

Canadian sales to the US rose dramatically in the early 1980s to a 1985 peak of over $2-billion (in 1997 dollars, see Figure 5). At their peak, sales to the US accounted for 86 per cent of Canadian military exports to all countries and amounted to significantly more than Canadian industry sales to our own Department of National Defence.

This Committee is well aware, and has already heard testimony from the government to the same effect, that US-Canada military trade and industrial base arrangements have resulted in Canadian specialization in components and subsystems, largely for US-built systems. The focus on the manufacture of weapon parts and components allowed the industry to develop "niche" expertise and concomitant markets, often as a result of technology transfer and licenced production arising from "offsets" required by Canada in military procurement contracts with US suppliers.

Ten years after the end of the Cold War the Canadian military industry is facing a very different US market. Sharp declines after 1985 have settled down in the 1990s to a volume of exports to the US at roughly one-quarter of the peak year - indeed, at about the same level as 1978.

Moreover, current changes in US arms trade regulations reflect significantly changed American attitudes towards Canada-US military trade and the concept of a North American defence industrial base. In April 1999, as part of a review of its International Traffic in Arms Regulations (ITAR), the US removed some of the exemptions from export license requirements for US military goods shipped to Canada. In other words, Canada is now to be increasingly treated like all other destinations of US military goods. (8) While US administrative, and especially Congressional, challenges to DPSA and NADIBO are not new, the traditional Pentagon political and strategic interest in maintaining a "special" relationship with Canada through its military industry appears to be ending. As one industry commentator has expressed it, now "there are no US champions of the DD/DPSA," and "the concept of a North American Defence Industrial Base has a much reduced significance in the post-Cold War era" (Canadian Defence Industries Association 1998).

Recommendation: The changed Canada/US defence production relationship represents an opportunity for Canada to bring controls on Canadian military exports to the United States into the same control system as applies to all other states. Canada should therefore require that all military exports to the US require the same permit approval system as applies to all other military exports, thus helping to bring Canadian regulations into conformity with Organization of American States standards, facilitating full reporting to the United Nations Arms Register, and generally enhancing Canadian military export transparency. (9)

Canadian military procurement and export dependence

Military industries heavily dependent on export sales and operating in a highly competitive international environment will tend not to favour strict national export control measures. Export controls that appear to them to be stricter than the international norm, they argue, put them at a politically imposed competitive disadvantage.

Canada's military industry remains highly dependent on export sales. The US traditionally purchased virtually half of all Canadian military production, but no longer does. Thus Canada has sought to increase sales in European markets and beyond, but with European governments also cutting military spending, Canadian arms sales to Europe have also fallen from a 1987 peak of nearly $450-million to annual sales of $120-140-million since 1990 (in constant 1997 dollars - see Figure 6).

This post-Cold War decline in US and European sales has drawn industry (and government) attention to Southern markets, especially in the lucrative Middle East and Asian regions. However, growing competition from additional suppliers chasing shrinking markets has only reinforced a history of fluctuating Canadian military exports to the Third World and new sales have fallen far short of replacing the declining trade with the North (see Figure 7).

In the 1980s in particular, procurement policies were used to support the production, and export, of complete weapons systems built in Canada. General Motors of Canada has won large export orders for light armoured vehicles initially produced under licence from Switzerland for the Canadian Army, most notably the $1.5-billion export, beginning in 1992, of 1,500 LAVs to Saudi Arabia. Other domestically built systems, notably patrol frigates and air defence, anti-tank systems (ADATS), have, however, not won significant export orders.

While Canadian military exports have generally been restrained, partly due to regulation but also substantially due to a competitive market place, there have still been significant instances of military sales to states with records of serious human rights abuses and to states involved in armed conflicts.

Recommendation: Canada should therefore take measures to reduce the export dependence of its military industry and to ensure strict export controls:

* Canadian procurement policy should avoid building exclusively military production capacity in Canada that will require extensive military exports to sustain it;

* The Canadian military export control system should be strengthened to block military transfers to countries engaged in serious human rights violations and to states in armed conflict, and to explore incorporating international Code of Conduct provisions into Canadian regulations.

Controlling dual-purpose equipment

Current military transfer control systems are based on internationally coordinated military equipment and munitions lists (in Canada the military and strategic goods section of the Export Control List). However, it is increasingly the case that military end-users are acquiring commercial equipment not included on official munitions lists, but still used in military operations.

In Canada, with the assistance of the former Defence Industry Productivity Program and the Technology Partnerships Canada program, industry has increased dual-use capabilities by developing civilian applications and markets for certain military technologies, thus expanding sales and reducing dependency on military sales. At the same time, commercial companies, especially those in the transport, electronics, and computer technology sectors, have entered the military market in response to the defence agencies' search for cost reductions through cheaper, but equally or sufficiently capable, "commercial off-the-shelf" (COTS) equipment acquired for military use.

A shift towards dual-purpose production helps reduce Canadian military industry dependence on export sales and should make it more feasible to produce military equipment on an "as needed" basis and then to switch back to commercial markets (most dual-purpose equipment is obviously non-combat equipment suitable for roles such as patrol and surveillance, communications, transport, and so on - much of it relevant to peacekeeping).

However, dual-purpose products present special military export control challenges. With dual-purpose goods now routinely exported to military end-users (for example, Canadian-built commercial helicopters to the armed forces of Colombia), military transfers are occurring without the benefit of any government scrutiny.

Recommendation: Hence, we recommend that Canada's military export regulations apply to all operational equipment transferred to military end-users.

References

Ball, Nicole 1992, Pressing for Peace: Can Aid Induce Reform? Overseas Development Council, Washington.

Canadian Defence Industries Association 1998, "A Canadian Industry Perspective on Canada/United States Defense Trade: Policies and Issues," October.

OECD 1998, Military Expenditures in Developing Countries: Security and Development.

(1) Within DFAIT, the concept of Human Security is linked to peacebuilding. The security and safety of people depends on conditions of "democratic governance, human rights, the rule of law, sustainable development, and equitable access to resources" (DFAIT Web Page, Peacebuilding). Minister Axworthy has pointed out that in order "to restore and sustain peace in countries affected by conflict, human security must be guaranteed just as military security must. This is where peacebuilding comes in: as a package of measures to strengthen and solidify peace by building a sustainable infrastructure of human security. Peacebuilding aims to put in place the minimal conditions under which a country can take charge of its destiny, and social, political and economic development become possible" (York University, October 30, 1996).

(2) The quintessential, and perhaps apocryphal, example is the famous line on American action in Vietnam, that it had become necessary to destroy the village in order to save it (presumably from communism). The "national security state" ideology prominent earlier in the South American context obviously put the people at great peril (including disappearances and torture) in the interests of preserving the security of the regime. And it must surely be said that nuclear MAD policies which contemplate the destruction of millions of persons in the interests of state survival are the antithesis of human security.

(3) This means turn means that security strategies and planning need also to attend to those conditions. Hence, the devotion of excessive resources to military forces can undermine human security by using scarce resources that might be better used to advance those economic and social conditions that are foundational to sustainable peace.

(4) Canadian military contributions should be designed to respond to unmet needs in areas where Canada has the potential to make a significant contribution - for example, UN rapid response capabilities, logistical and security support for humanitarian aid operations in regions of conflict, and intelligence support for international crisis assessment and peacekeeping operations. The review should explore the "comparative advantages" of Canada. Examples might include contributions drawing on capabilities that Canada would maintain for domestic requirements in any case (e.g., coastal patrol, search and rescue, aid to civil power), the provision of Disaster Assistance Response Team services, the provision (following sufficient additional procurement) of medium air lift capabilities in support of peacekeeping and humanitarian operations, exploitation of imaging capabilities that might be achieved in future generations of Radarsat, etc.

(5) Such a review should address two primary obstacles to making military assistance routinely available to communities in peril. First, while the international community is not lacking in military might, much of that capacity is of no help in protecting vulnerable civilians in situations of generalized chaos. Second, the international community lacks credible, timely mandates for such intervention. A primary challenge related to developing military capacities to protect the vulnerable and to compel states to meet their human security obligations is to develop a universal (not double) standard for deciding when such military protection and compulsion are warranted.

(6) It should be noted that these figures do not include any adjustment for the effects of "capital spending" accomplished through other means, such as barter arrangements (e.g., Upholder submarines) and contracting arrangements (e.g., pilot training aircraft supplied by Bombardier), both of which supply equipment at little cost to the capital budget. The increasing use of arrangements such as these means that effective capital spending is currently (and will in future years be) higher than indicated by raw capital spending figures.

(7) Least developed does mean least secure. In the period 1988-1997, only 15 per cent of states ranked in the top half of the Human Development Index experienced armed conflicts, while 43 per cent of those in the bottom half of the list were at war at some time during the same period.

(8) According to testimony before this committee, and to a report by a Canadian defence industry consultant, the military goods now requiring export permits include firearms, ammunition, missiles and rockets, security and cryptographic systems, toxicological agents and equipment, spacecraft and commercial satellites, and technical data related to the Missile Technology Control Regime. Source: Bernie Grover, 26 February 1999, "An Assessment of Proposed Changes to the International Traffic in Arms Regulations (ITAR)," available at www.cdia.ca.

(9) Canada has made commendable strides in military export transparency; however, a major reporting gap exists with regard to sales to the US. Canadian military export statistics and reporting are related to industry reporting requirements based on military export permits. Since there are currently no export permits required for (most) military goods transferred to the US, there is no adequate reporting system. As a result, Canada's annual military export report currently includes no information on sales to the US.
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Publication:Ploughshares Monitor
Date:Jun 1, 1999
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