BRITISH ARMS EXPORTS TO LESS DEVELOPED COUNTRIES, 1966-69

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CIA-RDP85T00875R001600030144-9
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RIPPUB
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S
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19
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December 22, 2016
Document Release Date: 
October 21, 2011
Sequence Number: 
144
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Publication Date: 
October 1, 1970
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IM
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Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 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 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 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 downprodIng and detlo,sm,allon Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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. SECRET 25X1 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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. - 2 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 - 3 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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. - 5 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 SECRET Persian'Gulf states Ceylor. . India Iran} I srae l Jordan Kuwait' Saudi' Arabia Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 - 7 SECRET L Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 8 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 25X1 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. SECRET Estimated Number Exported to Less Developed Countries Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 10 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 SECRET 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 SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 25X1 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 I SECRET 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. - 13 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 ^ SECRET 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. SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 0 SECRET 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. - 15 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 25X1 Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9 Next 2 Page(s) In Document Denied Iq Declassified in Part - Sanitized Copy Approved for Release 2011/10/31: CIA-RDP85T00875R001600030144-9