Backdrop to an investor campaign to regulate deadly arms trade

Major hurdles remain to clear before international agreement can be reached.

The arms trade is one of the world’s most dangerous yet least regulated trade sectors. According to a Small Arms Survey cited by Oxfam, the development charity, more than 740,000 people die each year as a result of the violence associated with armed conflicts and large- and small-scale criminality. In the early part of the last decade, support grew for a globally accepted new charter to mitigate the risks of such a lack of control. More concretely, since 2006, the UN has been seeking to establish a global Arms Trade Treaty (ATT). Initial signs were encouraging when the UN adopted a resolution “towards an Arms Trade Treaty to establish common international standards for the import, export and transfer of conventional arms”. Stumbling blocks swiftly arose, however. They came principally in the form of US opposition – the US accounts for around 40% of the annual worldwide trade in conventional arms – and it was the only country to oppose the resolution. The Obama administration has since amended the US position. It says it will support an ATT as long as it achieves global political consensus. In March and July this year, the UN will spend two weeks debating the ATT before a final UN negotiating conference in 2012. At a recent seminar in Paris held by Cheuvreux, the French broker, investor involvement and impact around an ATT was debated. The implications for investors were outlined both as moral and reputational risk, but also financial return; many investors will be invested in defence companies whose businesses would be clearly affected by a global treaty.Eli Lund, Executive Head of Secretariat at the Council of Ethics of the Norwegian Government Pension Fund – Global, outlined that one difficulty for large institutional investors occurs when global weapons treaties are implemented unevenly across countries. Looking back to the Council’s position on investments in cluster munitions – the sale of which were prohibited under the International Convention on Cluster Munitions signed in Oslo in late 2008 – Lund said the Council realised that the fund had investments in companies whose conduct was acceptable in their home countries, but which warranted immediate investigation under Norwegian government policy. One example was Thales, the French aerospace and defence group. While the trade of cluster munitions was legal in France at the time, the Norwegian fund decided to exclude Thales from its investment portfolio because of its involvement in the production of cluster bombs. A subsequent withdrawal by Thales from the production of components for cluster bombs led to its reinstatement to the fund’s investments in 2009. Speaking at the same event, Dominique Lamoureux, vice president of ethics and corporate responsibility at Thales, said the company’s position on arms sales followed government policy, but lamented that corporations were not involved in the international negotiation process on arms treaties. Partially state-owned, Thales’ adherence to domestic law gives it legitimacy in the face of ethical criticism from charities and SRI advisors alike. Other speakers felt that a
cohesive treaty could level the field, negating the risk of differences in arms policy between countries with conflicting agendas. It was also argued that a regulated international weapons trade might benefit companies who struggle to meet current ethical criteria for investment. Another crucial barrier to an ATT put forward at the event by Daniël Prins, Head of the United Nations Office for Disarmament Affairs (UNODA) in New York, concerned the difficulty in defining what constitutes ‘conventional weapons’. He asked whether an ATT should include armoured trucks, spare parts or even ammunition? On the latter point, Prins cited the example of Somalia: “This is a state where the supply of arms themselves is levelling out, while the supply of ammunition remains worryingly high, reflecting the prolific numbers of weapons by now in the country, to the extent that demand has wavered and UN embargoes are rendered futile.” The devilish detail the ATT will face if it is to be pushed through, he said, concerns which arms will be deemed necessary for regulation.Helena Viñes Fiestas, Policy Adviser at Oxfam, said that on a humanitarian level, Oxfam firstly sees the uncontrolled sale of arms as a threat to basic individual rights and safety. Oxfam says there is a direct link between armed conflict and poverty; with one feeding the other. But Viñes Fiestas said investors should also be concerned that arms trading could hinder a country’s economic development or destabilise regional peace. One problem for the UN, she said, was how to measure these humanitarian and development problems. Since 2008, she noted that the EU had adopted a ‘common position’ on the sale of arms, but said Oxfam believes a comprehensive global treaty is required for effective regulation and control. Oxfam, she said, recognised the dual role of weapons as ‘peace-keepers’, and said the NGO did not blame weapons manufacturers since many abided by existing multi-lateral treaties. Rather, Oxfam wants to see proper export control and company monitoring, which an ATT would enable, she said.

Link to News: Investors and NGOs aim for biggest ever signatory campaign to back global arms trade treaty