Implications of the End of the EU’s Arms Embargo on China

Implications of the End of the EU’s Arms Embargo on China



Over the next few months, the European Union is widely expected to eliminate the arms sales policy put in place after the Chinese government's violent 1989 crackdown on demonstrators in Tiananmen Square. The policy is not legally binding and according to its own statistics the EU sold over US$540 million in arms to China in 2003 even under the embargo[1]. Nevertheless, this change in the EU’s policies towards China illustrates an increasingly apparent divergence between the strategic interests of Europe and the United States.


EU business and Chinese politics

All nations are confronting the challenge of generating economic growth, keeping their citizens employed, maintaining their ability to compete in the global market place and providing a future that holds economic prosperity. Regrettably, most European economies continue to under-perform, placing considerable pressure on their governments and ensuring that exports remain a critical component of economic growth. The European defence industrial base, with a significant role to play in an export-based economy, has accelerated a process of mergers and acquisitions in an attempt to become more efficient and profitable. However, the European market offers few significant opportunities and the US market, the world’s largest, is tough to penetrate. Other export markets must be found and China is a logical and attractive target.


As the EU’s second largest trading partner, as the source of its biggest trade deficit and as a potential market for its defence industry, China is increasingly able to use its economic clout to push for concessions on issues like the lifting of the arms embargo. Take the commercial airplane equipment sector, as there is no other sector where politics and business intersect in quite the same way. The Chinese have become adept at playing this sector, pitting Boeing and Airbus against one another to affect political concessions from Brussels and Washington in exchange for large airplane orders.


With the lifting of the arms embargo, it is likely that China will try to test any mechanism, whether legal or non-binding, that Europe puts in place instead with a couple of well chosen non-lethal system orders to politically powerful European companies. Over the next 2-3 years, they may test the waters with an A-400 purchase from Europe that would entail a combination of direct purchase and co-production.


This prospective deal is an incentive directed at a politically influential company in Europe’s two most prominent advocates for the removal of the arms ban – France and Germany. Naturally, a piece of business this significant could not be ignored and would certainly put both the French and the Germans in overdrive to secure it, not to mention that it is a further incentive for their pushing to remove the embargo in the first place.


A new framework

With the lifting of the embargo, then, what mechanism could the EU place in its stead? The intention of the 1998 EU Code of Conduct on Arms Exports was to tighten the criteria for arms sales in a non-binding framework, where considerations would include the weapons proliferation history of the purchaser, its human rights record, how destabilizing the sale might be to the region in which it would be sold and the potential impact on other European members, on their interests and on EU allies generally. Now Europe talks of a strengthened code of conduct to manage arms sales to China, the argument being that a new non-binding agreement would provide stronger criteria and ensure that arms sales to China did not undermine broader global interests.


It is unlikely, however, that such a voluntary measure would be effective, when France and Germany have a track record of ignoring EU laws and understandings that they view to not be in their national interest. For example, the European Stability and Growth Pact, a keystone of EU policy and governance created over concerns about debt burdens undermining the value of the Euro, is not being followed. France has been in breach of the pact for 3 straight years, with Germany a consistent violator and others also in breach. How could the US, Japan, Australia and other South East Asian nations believe that the Europeans have any intention of abiding by this suggested code of conduct when faced with well-timed and thought-out orders for European defence equipment from China? The underlying impetus for removing the embargo is commercial and that will remain the principal driver for decisions under any future policy as well.



So what will China do with an increase in capability resulting from EU arms sales? We already understand that China has significant territorial ambitions, with Taiwan, the South China Sea and the Ryukyu Islands south of Japan topping the list. On the issue of Taiwan, the China threat is real. The US Defense Department believes that China spends three times as much as it reports on defence, topping out at US$75 billion per year and the focus of all those resources is to transform its military into a force capable of projecting China’s interests as it sees them. The ‘use of force’ is a key aspect to China’s policy toward resolution of the Taiwan ‘issue’, and the ability to defeat Taiwan and to deter America from coming to its aid are both key aspects of Chinese force modernization plans. To argue that China does not harbour regional military goals is to ignore completely the massive procurement underway both from foreign sources like Russia and Israel and from domestic production in areas such as naval platforms.


While the Russians are capable of providing technologies to China that are useful in defence modernization, they are not as advanced as their European counterparts in most areas and help more with contingencies. The introduction of Europe as a prime supplier of defence equipment and advanced technologies will almost certainly place upward pressure on any remaining restraint the Russians and Israelis may have over the transfer of cutting edge technology to China and this will greatly impact China’s capabilities over time.


The US is required under the Taiwan Relations Act (1979) to provide Taiwan with weapons for self-defence. As China’s military modernizes, so the pressure on the US increases to provide Taiwan with more capabilities and better technology. If Taiwan begins believing that China will soon be able to militarily overrun it, that could force the island to make a premature decision and announce its formal independence. Conversely, China may feel that it is capable of overrunning Taiwan as a product of accelerated modernization and could therefore decide to pursue a military solution to their ongoing Taiwan issue.


Europe’s actions are thus further complicating an already tense cross-Strait environment. In addition, there are broad implications here for Chinese military modernization and transformation and deep concerns about China’s intentions as an emerging military force in Asia.


China also remains one of the world’s most committed proliferators, with missile technology, nuclear technology and other military applications finding their way into the hands of the worlds rogue regimes. From Sudan to Iran, Libya to North Korea, China has played an instrumental role in equipping totalitarian regimes with the equipment necessary to subjugate their own people (Sudan) and threaten their neighbours (Iran).


In late 2004, President Bush announced sanctions against seven Chinese companies for selling nuclear weapons technology to Iran. In contrast, the Chinese have issued public statements of support for Iran’s nuclear programme, and have stated their intent to block the UN Security Council from involvement with the Iran issue. As the EU3 (United Kingdom, France and Germany) seek to negotiate an end to Iran’s weapons programme, Europe should look beyond initial sales to China and realize that such sales are clearly not in Europe’s strategic interest. As China’s capabilities improve, so does the ability of Chinese companies to export these technologies to rogue nations such as Iran.


Finally, Europe has been justifiably concerned about due process in the US for those imprisoned at Gauntanamo Bay and the breakdowns of discipline at Abu Ghraib prison. So what should we make of Europe’s decision to disregard ongoing Chinese abuses? European parliaments are calling for the arms embargo to remain on human rights grounds alone, but their executive branches are moving forward regardless.


US-EU relations

The removal of the arms embargo and the potential consummation of a significant deal such as for A-400s would not only provide China with modern defence equipment and technologies, but would strengthen the bond between Europe and China while undermining US-European ties and transatlantic defence co-operation. Despite problems – for example with technology sharing for the ongoing Joint Strike Fighter (JSF) programme – such co-operation can be enormously beneficial to both sides, providing cost-effective national security options. The victory of the Lockheed Martin and Augusta-Westland team in providing the US Navy with a medium-lift helicopter, US101, for use as Marine-One is an excellent example of a successful transatlantic collaboration.


Although we can expect China to continue to purchase arms from Russia and Israel, the introduction of European arms technologies would have a significant impact on China’s capabilities. It is also likely to start a process of greater understanding of European technologies originally designed for NATO. This begs the question, should the US be drawn into a conflict in the Taiwan Strait in the coming years, will China have a better idea of how to fight if they have NATO technologies integrated into their armed forces?


There remains deep antipathy within the US Congress and some national security constituencies over the sharing of technology with allies and the outsourcing of capabilities to non-American companies. These are real concerns, but for the most part they can be overcome by dialogue and reasonable negotiation. However, the United States remains committed to using what leverage it has to block defence sales to China that it feels will negatively impact its interests. While it has little leverage with Russia for selling arms to China, it has much more with Israel and Europe. Consider the recent incident with the Harpy Ground Attack Unmanned Aerial Vehicle upgrade, when the US suspected that Israel was providing technology to China without reporting it under previous arrangements. Upon discovery the pressure brought on the Israelis was quick and intense and resulted in a ‘clarification’ of the issue. In 2001, US pressure also forced Israel to withdraw its sale of the Phalcon Airborne Early Warning, Command & Control radar system to China. This was a high-profile public case that resulted in Israel backing down, but the end result has been damaging to relations with Israel, an important US ally.


If Europe believes that selling weapons to China is in its interest and America believes – as it does – that China remains one of the world’s most significant proliferators, human rights abusers and a threat to peace in the Taiwan Strait, the case can be made for ending technology sharing and wrapping up any current joint ventures with Europe. In fact, there have been discussions in Congress on potentially penalizing companies selling weapons to China for a period of five years by shutting them out of the US market. That is the reality of the tone of today’s debate and while it does not enjoy support in the Bush Administration, it will surely impact the direction of current and future projects. This decision is likely to undermine broader and more positive ties each time the Chinese seek a new technology or Europe’s defence equipment manufacturers push a transaction.


President Bush’s trip to Europe later this month is a very real attempt to mend fences with some European countries and institutions that were not supportive of US intentions in Iraq. These same countries are calling for closer ties with America while working to change the position of Europe on arms sales to China. Their actions on China contradict the legitimacy of those calls and the intent of those making them, which undermines EU credibility as a partner in global security policy. If we are to believe that Europe rues the damage to US-EU relations, why undertake such a move now that so clearly affects US interests?


There can be no doubt that there are policy makers in both Europe and China who see both commercial and strategic gain from a policy that undermines US interest and promotes their vision of a multi-polar world. Every defence sale to China becomes a potential flashpoint in US-EU relations, as well as for US-China relations. In short, this policy change will further undermine better transatlantic relations not just in the short term but well into the future.



Rupert Hammond Chambers

The author is President of the US-Taiwan Business Council

[1] EU Annual Report on ‘Code of Conduct on Arms Exports’, November 11, 2004

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