Undue influence of the arms industry
Michelle Fahy, IPAN National Conference, 23 November 2022
Undue influence of the arms industry in Australia
Most stories I do end up being about two things: transparency and accountability. More accurately, the lack thereof, in this industry.
Today I’ll give you a snapshot of the intersection between the arms industry and the Australian government – the power and influence on one hand, and the secrecy and lack of accountability on the other. It’s hard to do simply and in a short space of time, so I have chosen a particular example from my work so far – as a case study which typifies how it works – to shine a spotlight on the undue influence of this industry. It’s by no means the only example, but it’s a really good one for illustrating how this industry can manipulate and control government decision-making to undermine the public interest to serve its own private interests. We know a fair bit about this one thanks to the Australian National Audit Office and its report.
This undermining of the public interest to serve private interests, when it becomes entrenched, is called state capture. The World Bank describes it like this: “State capture is the exercise of power by private actors — through control over resources, threat of violence, or other forms of influence — to shape policies or implementation in service of their narrow interest.”
First, a bit of context showing how the arms industry here fits in with the global arms industry.
You don’t need to read the chart. The simple point I’m making is the number of names in red – on both sides.
At left is a list of the top 15 global arms manufacturers. At right is a list of the top 15 contractors to Defence in Australia. The names in red are those that appear in both lists – showing a large amount of crossover. This is not surprising, but it’s useful to get a visual sense of the overlap.
The left column shows where those foreign companies rank globally. All of Australia’s 11 foreign-owned top defence contractors are global top 40-ish companies (KBR = 43rd), seven of them are in the global top 15.
I’m making this point, using the top 15 in particular, because the Australian Strategic Policy Institute (ASPI) did a study in 2017 that found, on average, in the 20 years to 2015, the top 15 contractors in Australia took 91% of the revenue.
Along with this quick look at the extensive presence of the global arms industry here, I’ll mention a 2020 report from SIPRI (the respected Stockholm International Peace Research Institute which tracks global arms sales and military expenditure). The report is called Mapping the international presence of the world’s largest arms companies.
The report took the world’s top 15 arms manufacturers and systematically investigated how many subsidiaries and joint ventures they had dotted around the globe. To be included, the subsidiaries had to be involved in arms production and military services activities and they had to be selling their products or services to military clients. They couldn’t just be sales or marketing shopfronts, or shell companies: those types of entities were excluded.
SIPRI found 400 subsidiaries of these 15 companies spread across at least 49 countries. They are mostly in countries that have two features:
1. the country is a large arms importer
2. it’s trying to establish a local arms industry.
Makes sense, right? You can see why a foreign arms-maker would move in.
And – you guessed it – Australia ticks both those boxes. Australia is currently the world’s 4th largest arms importer, and we are one of America’s biggest clients. In the five years from 2016-20 Australia was the United States’ second biggest arms customer, after Saudi Arabia. Even before that, we have been a top 5 US arms industry customer for a long time. It’s worth bearing that in mind when the US calls us its very good friend.
We are also BAE Systems’ (UK) fourth largest market. After the Turnbull government announced its massive planned spend on weaponry, BAE’s director of international markets said in 2017: “We are really in … exciting times in the Australian market. The government procurement plans are hugely ambitious. There aren’t too many countries who have that scale of defence procurement ambition in the next 15 years.”
And that was before AUKUS came along!
This is the Australian summary from SIPRI’s report:
1. Australia is now the largest military manufacturing hub outside the two major hubs of North America and Western Europe.
2. Australia ranks second in the world for the number of foreign subsidiaries of the top 15: we have 38 subsidiaries of those 15 companies here. The UK has most with 56, Saudi Arabia is third with 24.
So, that sets the scene. It’s obvious there’s a significant presence in Australia of the topmost echelons of the global arms industry: a lot of power and influence.
The Thales Hawkei vehicle procurement is a strong example of undue influence. How the company came from nowhere to win this $1.3 billion contract is a complex and highly political story that beggars belief, frankly. It contains many elements of undue influence that pop up across other procurements, yet here they are all in one story, so it’s a great example.
It also shows, starkly, how industry bent both sides of politics to its will – that’s state capture……………………………………
The Thales Hawkei vehicle procurement is a strong example of undue influence. How the company came from nowhere to win this $1.3 billion contract is a complex and highly political story that beggars belief, frankly. It contains many elements of undue influence that pop up across other procurements, yet here they are all in one story, so it’s a great example.
It also shows, starkly, how industry bent both sides of politics to its will – that’s state capture.
So – there you have it – it’s a big story and a great example of the undue influence of the arms industry in Australia, bending both political parties to its will, against the public interest, which fits in with the World Bank’s definition of state capture – not as the only example of course. If you Google “Confronting State Capture” you will see the report I contributed to, which includes this story and a lot of other examples, alongside similar material from the fossil fuels industry. It was published earlier this year by the Australian Democracy Network.
Further reading: my November 2020 series (Part 1 and Part 2) contains additional disturbing details about the Thales Hawkei procurement. https://undueinfluence.substack.com/p/speech-undue-influence-of-the-arms?utm_source=post-email-title&publication_id=297295&post_id=89729647&isFreemail=true&utm_medium=email
No comments yet.
Antinuclear 
Leave a Reply