BRITISH ARMS EXPORTS TO LESS DEVELOPED COUNTRIES, 1966-69
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Original Classification:
S
Document Page Count:
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Document Creation Date:
December 22, 2016
Document Release Date:
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Sequence Number:
144
Case Number:
Publication Date:
October 1, 1970
Content Type:
IM
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Cl,4/O47./)
S-
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
British Arms, Exports . To Less Developed Countries, 1966-69
Docu1Enr?sEn.1i.s BRI1iVCH
CAflP ~ng
~.
~iROY
ER IM 70-143
October 1970
Copy No. 55 3
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP I
Exdudad From oulonot1c
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
October 1970
British Arms Exports
To Less Developed Countries
1966-69
The United Kingdom traditionally has been an
important international supplier of arms, and is
presently the fourth largest exporter of military
equipment to less developed countries.* This memo-
randum examines the scope of and rationale for cur-
rent British arms sales to the Third World and
assesses the economic implications of these sales.
UK Role as Supplier to the Third World
1. During the past four years the United King-
dom has ranked as the fourth largest supplier of
arms to Free World less developed countries, after
the United States, the USSR, and France (see Table 1).
* The term his developed countries of the Free
World includes the following: (1) all countries
of Africa except the Republic of South Africa,
(2) all countries of East Asia except Japan,
(3) Portugal and Spain in Europe, (4) all countries
in Latin America except Cuba, and (5) all countries
in the Near East and South Asia.
Note: This memorandum was produced solely by C.TA.
It was prepared by the Office of Economic Research
and was coordinated wita the Office of Current In-
teZZigence and with the Office of Strategic Research.
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Table 1
Exports of Military Equipment
to the Less Developed Countries a/
Million US $
Exporting Country
1966
1967
1968
1969
United States b/
1,350
1,385
1,270
1,350
USSR
440
375
355
300
Y~rance
110
110
215
165
United Kingdom
100
80
120
165
a. Exports represent actua a iveries and
are to he differentiated from arms sales
agreements shown in Table 3, below. Data
have been rounded to the nearest $5 million.
b. Exports are by fiscal year and include
only US government transfers; exports to the
Indochina area are ecoZuded.
British deliveries of military equipment to these
countries during 1966-69 totaled nearly $465 mil-
lion or about 35% of global British arms exports..
During the same period, Britain also provided mili-
tary advisory and training assistance to Third
World countries at an estimated cost of $75 million.
British Arms Sales Campaign of the 1960s
2. Britain, which has been a major supplier
of military equipment prior to World War II, entered
the postwar period with a highly efficient arms in-
dustry. During the Korean War, rearmament and heavy
government support kept the British arms industry
competitive, but in the middle and late 1950s the
situation began to change when the United States
achieved dominance in equipping NATO forces and
when Australia and Pakistan gradually shifted to
US equipment. In addition, competition from other
large arms suppliers -- principally the USSR, which
provided large quantities of military equipment on
a grant basis or under liberal repayment terms,
and more recently the French -- also cut into
Britain's markets. Sales to less developed coun-
tries declined also as British equipment became
more sophisticated and expensive.
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3. In an attempt to revitalize its sagging
arms export program the United Kingdom reorganized
its arms sales apparatus in 1966, centralizing
sales efforts in the newly created post of Head
of Defense Sales in the Ministry of Defense. Sir
Ray Brown was appointed to this post and was in-
structed to "insure, within the limits of govern.,
ment policy, that as much military equipment is
sold overseas as possible and also to develop
research to stimulate the interest of future buyers."
Additional service attaches and civilian representa-
tives of the Ministry of Defense were appointed to
key areas to promote the sale of British military
equipment. Sales, however, are concluded by rep-
resentatives from the Royal ordnance factories or
private arms manufacturing firms.
Commercial Credits
4. As part of its sales promotion effort;, the
British arms industry began to offer medium--term
credits in lieu of cash sales. Although there is
little information on the terms of recent British
agreements, repayment periods are believed to
average about six and one-half years and to extend
for as long as ten years. Interest rates generally
range from 5% to ti . Although these 25X1
terms are similar *.::. those offered by the French,
the British agreements do not contain special con-
cessions that are often granted by the French. For
example, the British are not known to have entered
into barter arrangements or to have agreed to off-
set part of the cost of arms with purchases of
goods or services from less developed countries
as is true of some French arrangements.
5. The British, like other major arms ex-
porters, also have concluded contracts providing
for the partial assembly of British equipment in
the recipient country, as in a 1969 contract to
supply naval craft to Argentina. Some British
firms have also entered into licensing agreements,
particularly with India, under which the recipient
country is permitted to produce British-designed
military equipment inctiding jet fighters and tanks.
Political Restraints
6. Despite the desire to increase arms exports,
political considerations have caused the British
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government to impose arms embargoes and restrict
the type of arms to be supplied to particular
clients.* During the Nigerian civil war, Great
Britain, restricted shipments of sophisticated mili-
tary equipment to the Federal government, causing
Nigeria to turn to other sources -- particularly
Communist countries -- for this type of equipment.
Since the end of the war, UK arms sales to the
Federal government have increased threefold, but
the USSR probably will retain part of this once
almost exclusively British arms market. More
recently Libya turned to the USSR for ground forces
equipment after the cancellation of a $112 million
arms contract with the British. The United Kingdom
had refused to deliver the Chieftain tank, purchased
as part of the agreement, because of a decision to
prohibit the export of this sophisticated medium
tank with a 120-mm gun to the Middle East.
7. The requirement that the United Kingdom
obtain US approval to sell military equipment that
was either manufactured under US licenses or funded
by the United States also inhibits British arms
sales. The recent sale of 12 Canberra jet bombers
to India, for example, could not be implemented
until the United States approved the sale, because
funds for the manufacture of these aircraft were
received from the United States under the US mili-
tary aid program in the 1950s.
Results of Britain's Sales Campaign
8. Britain's recent arms export drive has been
successful. Arms sales agreements with Third World
countries, although fluctuating widely from year to
year, increased from an annual average of less than
$115 million in 1966-68 to about $310 million in
1969 (see Table 3). Actual,exports have thus far
increased far more gradually because of the lag
between sales agreements and deliveries. This lag
is particularly great for naval craft.
Unti 1 1964 South Africa had been heavi Zy de-
pendent on the United Kingdom for arms. .Tn response
to the UN Security Council resoZutione of 1963 and
1964, the United Kingdom prohibited all British
arms shipments to South Africa and the Pretoria
government turned to countries not honoring the UN
resolution -- especially France.
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Estimated Value of UK Military Sales Agreements
with Less Developed Countries
Africa
Ethiopia
Ghana
Kenya
Libya
Nigeria d/
Sudan
Zambia
East.Asia
Indonesia
Malaysia
Singapore
Thailand
Latin America
Argentina
Brazil
Ecuador
Panama
Peru
Near East and South
Asia
d. The'vaZue figure is for known agreements. Other trans-
actione,may have taken place undetected.
b. A $112 million tack and armored vehicle contract canceled.
a.:..Negotiations under way.
Total
Million US $
1969 1970
0
6.6
0
0'
0
5.0
1.5
0
0
2.3
0
3.6
6.4
14.3
16.8
a/
'0 b/
c/
N.A.
5.7
2.6
15.
0
1.8
0
0.5
0
0
24.0
0
2.4
0
0'
0
0
1.5
1.3
0
0.4
4.8
2.4
0
0
10.0
'
30.0
0
0
0
15.9
2.0
0
4.3
62.4 '
61.0
0
16.0
15.0
31.0
240.0 c/
0
81.0
0
' 0
0
3.6
0
0
0
1.5
0
0
4.8
26.4
0.3
N..A.
4.6
6.0
0.5
0.5
0
0
0'
0
12.0
0
14.9
5.0 c/
68.5
N.A.
N.A.
N.A.
94.0
N.A.
N.A.
N.A.
N.A.
3.0
1.4
41.0
'N.A'.
N. A.
31.2
0.4
4.0
04
16.8
0
0
11.5
146.0
64,9
308.6
a. A $240 million miesi a contract canee ed
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Persian'Gulf states
Ceylor. .
India
Iran}
I
srae
l
Jordan
Kuwait'
Saudi' Arabia
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9. Near East and South Asian countries have
been the best market, with almost 55% of arms sales
between 1966 and 1968. The less developed Common-
wealth countries accounted for less than 20% of
British arms sales, although their purchases have
been increasing in recent years. During 1969,
however, large arms purchases by four Latin American
countries accounted for about 65% of the sales to
less developed countries. These sales consisted
mainly of naval ships, although some transport air-
craft and helicopters also were included. All four
countries h-td purchased naval equipment from the
United Kingdom in the late 1950s or early 1960s.
10. Naval craft have accounted for more than
50% of total British arms sales in the Third World.
In 1969, they accounted for 70% of the total.
Naval sales, which were valued at-about $340 million
between 1966 and 1969, were distributed amon4 coun-
tries as shown in Table 4. Latin American countries
account for some 55% of recent naval sales to the
less developed countries. The size of naval craft
ordered ranges from small patrol boats and hover-
craft to aircraft carriers and submarines. The
following tabulation indicates the types and quan-
tities of British naval craft currently in the
inventories of less developed countries.
Type of Ship
Estimated Number
Exported to Less
Developed Countries
Aircraft carriers
3
Submarines
5
Submarine chasers
9
Cruisers
5
Destroyers and
escorts
39
Patrol boats
43
Mine warfare
36
11. Aircraft represent a ;:elatively small part
of recent British sales. In the past two years,
orders for only about 40 jet fighters have been
received. This compares with British exports of
almost 600 jet fighters to less developed countries
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British Naval Sales
to Less Developed Countries
1966-69
Country
Million US $
Argentina
54.7
Brazil
31.0
Ceylon
0.5
Chile
74.0
Iran
56.0
Kuwait
1.2
Libya
31.1
Nigeria
9.6
Panama
1.5
Peru
24.0
Saudi Arabia
28.3
Singapore
9.6
Thailand
15.9
Total
337.4
over the preceding 14 years.* The military air-
craft currently being sold by the United Kingdom
are at, least ten years old and in many cases have
been brought out of storage and modified for ex-
port. These stocks will eventually be depleted
and as the years pass the existiiq equipment will
become increasingly less saleable. The mainstays
of British military aircraft exports have been the
Lightning, which entered service in 1959, the
Hawker Hunter, which first saw service in 1954,
and the Canberra, which went into operation in
1951. Production of the Canberra and the Hunter
has been terminated and production of the
Lightning will probably end within a year. The
only other jet fighter currently in production,
the V/STOL Harrier, has only a limited appeal to
the. Third World market.
'..In contrast, the French exported over 500 jet
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12. The United Kingdom has been successful in
exporting a wide range of missilGa including several
types of surface-to-air and antitank missiles.
Their largest missile sale to a less developed coun~-
try, a $240 million 1968 contract with Libya, has
been canceled. The Libyan government, after much
debate, decided the system was too sophisticated.
Britain also has exported substantial quantities
of tanks, armored personnel carriers (APC), mortars,
and artillery as well as sizable quantities of small
arms and ammunition. The type and quantity of
British ground forces equipment exported to the
less developed countries is indicated in the fol-
lowing tabulation:
Tanks
Self-propelled gun
Armored vehicles,
personnel carriers,
and cars
Artillery pieces
Mortars
1,044
103
4,005
2,261
5,192
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ingapore, which is intended to reduce economic
dislocations that might result from the British
pullout in 1971, at least $18 million has been
grant aid basis. Of the $112 million UK grant to
S
have received military equipment recently on'a
Grants in Aid
13. Almost all British military exports in
recent years have been commercial transactions;
less than 5% represent grant aid. During 1966-69,
small amounts of grant aid, in the form of dis-
counts from list price, may have been extended to
a number of Commonwealth countries, and an offer
of about $5 million worth of military aid was made
to Southern Yemen earlier this year. Singapore,
however, is the only recipient that is known to
9.
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Estimated Number
Exported to Less
Developed Countries
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earmarked for defense spending. The grant has
been applied toward the purchase of some $40 r.?il-
lion worth of British military equipment, in-
cluding jet fighter and trainer aircraft, a surface-
to-air missile system, and six patrol boats.
14. Prior to 1966, grant aid consisted mainly
of small arms, vehicles, patrol craft, and assorted
aircraft which were left behind by departing
British forces when former colonies were granted
their independence. Among these former colonies
only a few remain dependent on the United Kingdom
for the bulk of their military equipment (see
Table 5). Most of these countries, no longer the
recipients of grant aid, have diversified their
military inventories with equipment purchased from
other Western sources. Seven of these countries,
however, have turned to Communist suppliers, largely
because the types and quantities of equipment they
desired were not available from the United Kingdom
but could he obtained rapidly from the Soviet Union.
In the case of India -- formerly the major recipient
of British military aid -- this latter consideration,
plus Indian efforts to diversify its sources of
supply and to broaden international support in its
conflicts on the subcontinent, has resulted in the
USSR's becoming India's predominant supplier of
arms.
Technical Assistance
15. Technical assistance is a major form of
British military aid to Britain's former colonies,
where most of Britain's military-technical assist-
ance program has been concentrated. Approximately
90% of the number of British military advisers and
technicians serving in less developed countries
have been on assignment in Commonwealth countries
and three Western oriented oil producing nations --
Iran, Libya, and Saudi Arabia. These countries
also account for 90% of the foreign trainee slots
at British military training facilities. It is
estimated that UK technical assistance to the less
developed countries of the Commonwealth has cost
the British government about $8.5 million a year
since 1966.
16. In 1968 and 1969 nationals from about 35
less developed countries received military training
in the United Kingdom, and British military
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Suppliers of Arms to Former British Colonies
1954-69
Million US $
Suppliers
United
Kingdom
Other
Western
Sources
Communist
Countries
Ceylon
9.5
12.4
0
Cyprus
0
1.0
27.0
Ghana
22.0
16.2
10.0
India
287.3
374.3
807.0
Jamaica
0.6
1.6
0
Kenya
15.8
3.3
0
Malawi
0.8
0.1
0
Malaysia
90.3
88.7
0
Nigeria J
22.9
62.1
36.0
Pakistan
172.9
987.7
80.0
Sierra Leone
5.6
0
0
Singapore
1.2
7.0
0
Tanzania
3.2
5.0
15.0
Trinidad and Tobago
1.9
0
0
Uganda
4.6
3.0
15.0
Zambia
4.3
4.7
0
a. Nigerian arms imports during its civz wax
were extensive and often made through complex
channels. Nigerian figures, therefore, are a
minimum estimate.
technicians were on assignment in over 20 of these
states . British training courses 25X1
have covered a wide range of subjects including
staff training, but they have emphasized the op-
eration and maintenance of equipment. Britain's
technical aid program, however, is considerably
smaller than corresponding French, US, and Soviet
programs (see Table 7).
17. The number of British technicians and
advisers stationed in Third World countries has
been declining in recent years, in large part
because of cutbacks in programs with Commonwealth
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Military Personnel Involved
in Technical Assistance Programs
Persons a/
Trainees in
Donor Country
Technicians in Less
Developed Countries
Donor Country
1968
1969
1968
1969
United Kingdom
710
855
1,110
905
France
1,360
1,245
2,315
2,340
United States
5,835
6,095
3,485
3,150
USSR
3,585
2,865
7,000
6,560
a. Numbers are rounded to the nearest fiv_e.
nations, where presently more than 65% of the ad-
visers
are
stationed. Training agreements with
several
of
these countries are scheduled to ter-
minate
in
the early 1970s and the number of per-
sonnel
in
the British Joint Service Training Teams
is being reduced. The phasing out of the program
is usually by mutual agreement: the British trying
to limit their worldwide commitments as an economy
move and recipient countries wanting to reduce
their dependence on the United Kingdom for military
support. For example, the British training mission
in Ghana began to phase out in August 1969, and
current plans call for no replacement of British
advisers as their tours end. The last team member
is scheduled to leave in June 1971. In Kenya the
five-year training agreement, which was to expire
in mid-1969, was extended for another two years,
but the number of British advises involved was
reduced. The program in Malawi will also end in
1972. The departure of the British will reduce the
effectiveness of these countries' armed forces and
probably make it necessary for them to obtain
assistance from other couni.ries, as Zambia did
when it replaced the British air mission with an
Italian team. The provision of technicians in
association with British arms sales, however, is
expected to continue at its present scale.
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18. More than 850 foreign nationals were under-
going training in the United Kingdom during 1969.
There do not appear to be any planned cutbacks in
this part of the British Technical Assistance Pro-
gram over the next few years.
Conclusions
19. The value of British arms sales contracts
with less developed countries increased sharply in
1969, reaching $310 million. During 1966-69, the
United States, the USSR, and France surpassed the
United Kingdom as exporters of arms to the Third
World.* Arms exports have made up a much smaller
share of total British exports to Third World
countries -- 2.5% -- than of comparable French and
Soviet exports.
20. British policy objectives for exporting
armaments are primarily economic. They include
the desire to increase export earnings, recover
some research and development costs, lower unit
costs to the British government, and find an outlet
for surplus equipment. Recent arms agreements also
have been a means of maintaining British influence
in the Third World. Thus far in 1970, the United
Kingdom has signed major arms accords with Iran and
Argentina involving the delivery of three frigates,
a surface-to-air missile system, and several heli-
copters. Reports also indicate that the United
Kingdom has concluded its largest arms sale with
a less developed country -- some $240 million worth
of ships to Brazil.
21. The recent upturn in arms exports is due
primarily to the reorganization of the military
export sales apparatus in the British government
and the accompanying aggressive British effort to
increase sales. Since 1966 the United Kingdom has
offered arms on medium-term credits and at rela-
tively low interest rates. The British are also
making greater use of package deals which include
partial assembly or local production under British
*_ During t is period, US exports were about 12
times as Zarge, the Soviet Union's more than three
times greater, and France's 1.5 times.
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license. The actions of the recently installed
Conservative government, moreover, suggest that
they have dec!,ded to pursue an even more active
world wide arms sales campaign than their pred-
ecefisors.
22. Less than 5% of arms exports to less de-
veloped countries has been provided under govern-
ment grants, those chiefly to Commonwealth coun-
tries, and 7rants will remain a relatively minor
part of the ?ritish arms export program. Technical
assistance ha6 continued as ar important form of
assistance to the less developed countries, espe-
cially commonwealth countries, although the number
of personnel involved will continue to decline as
Britain is?,es to reduce the cost of the program.
The number of foreign students training in the
United Kingdom, however, is not expected to decline
in the near future.
23. Contracts for over $400 million worth of
military equipment (including the recently reported
$240 million sale to Brazil) were concluded with
less developed countries during the first ten
months of 1970 -- the largest annual volume of
sales to these countries to date. Negotiations
for additional sales are in progress. Moreover,
owing to the normal delay of three to fire years
involved in the delivery of major naval craft and
to increased sales in the late 1960s, arms exports
during the early 1970s are expected to increase
over the level of $115 million a year for 1966-69.
Although naval craft probably will continue to be
the mainstay of the British export drive in the
Third World, large orders for surface-to-air
missile equipment and electronic gear are expected.
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