15 February 1996
THE GUIDELINES: SUMMARY OF THE CONTEMPORARY DOCUMENTATION
1. After the ceasefire had been agreed by Iran and Iraq in August
1988, a paper on its implications was circulated by the Foreign and
Commonwealth Secretary to the Prime Minister and Ministerial
colleagues. This anticipated major opportunities for British
industry in the post-war civil reconstruction of Iraq and Iran. On
defence sales the paper said:
"In the early post-conflict era the opportunities for sales of
defence equipment to Iran and Iraq will be considerable. Our
defence sales policy will need to be reviewed. We doubt if the
review will lead to early withdrawal of the Government
guidelines on defence sales to Iran and Iraq. Nevertheless we
can use discretion within the ministerial guidelines to adopt a
phased approach to borderline cases, relaxing control on a
growing number of categories as peace takes hold."
2. On 4 November 1988, the Minister for Trade (Mr Clark) wrote to
Mr Waldegrave (FCO) and Lord Trefgarne (MOD) proposing that the
discretion within the Guidelines should now be used as envisaged in
the 31 August paper. Mr Waldegrave and Lord Trefgarne responded on
14 and 17 November respectively, agreeing that a more flexible
attitude towards export licence applications should be adopted within
the existing guidelines. In particular, the three Ministers agreed
that this flexibility could be applied to allow a British company to
refurbish hovercraft for the Iranian National Oil Company.
3. On 30 November Mr Clark wrote again to Mr Waldegrave and Lord
Trefgarne proposing that Government policy on licensable exports to
Iran and Iraq should be changed. The three Ministers met on 21
December 1988, and a revised wording of guideline (iii) which took
into account the circumstance of the ceasefire was discussed. The
Ministers agreed that this wording should be considered further by
their Departments. The wording read:
"we should not in the future approve orders for any defence
equipment which, in our view, would be of direct and significant
assistance to either country in the conduct of offensive
operations in breach of the ceasefire."
A new Guideline
(v) was also proposed which provided for policy to be kept under
review in the light of developments in the area.
4. The outcome of the 21 December meeting was set out in a letter
from PS/Mr Waldegrave to PS/Lord Trefgarne and PS/Mr Clark dated 23
December. The key points were:
- ceasefire in conflict changed the circumstances which guidelines
had been drawn-up to meet;
- right to consider modification to adjust public policy to
circumstances of ceasefire - revised wording circulated with
letter for consideration;
- revised guidelines would require approval of Secretaries of
State and Prime Minister.
As the Foreign Office briefing for the 21 December meeting makes
clear, the purpose of the revised wording of the Guidelines was to
"allow the public line to catch up with current practice, retain
[the] right to scrutinise export licensing applications for the
forseeable future, and preserve [the] ability to adjust practice
according to changing events in the region". The only substantive
change which the formal adoption of this revised wording would have
had is to have removed the option of reverting to a more restrictive
interpretation of Guidelines should circumstances have required this
- as, in the event, they did.
5. On 10 January 1989, PS/Mr Clark responded to the letter from
PS/Mr Waldegrave saying that Mr Clark had reservations about the
wording of Guidelines discussed at the meeting, and proposed that DTI
and MOD officials should draft a new form of words which, if agreed
by FCO, should be submitted to Secretaries of State and the Prime
Minister. He suggested that the 21 December form of words should be
adopted "as a temporary working premise for the IDC [the committee of
officials which considered export licences under the Guidelines]
while officials seek a wholly acceptable form of words". The letter
from Mr Clark's Private Secretary also proposed that, when a more
liberal policy on exports to Iran and Iraq had been agreed, this
should be implemented without any public announcement.
6. There were two main reasons for favouring a low key approach,
and hence for not making a formal announcement at the time the change
was made:
- Concern that a high profile announcement would encourage British
industry to submit licence applications for a wider range of
products. This would be undesirable because only those products
which fell into the "possible" category under the existing
guidelines would stand any chance of success under the "new"
guidelines. If companies submitted applications for new
categories of defence goods, these would have been doomed to
rejection, wasting time and money all round.
- As when the original Guidelines were introduced, there was
concern that a high profile announcment would have been
similarly misinterpreted by other countries, eg Arab States (who
might think it signalled the re-arming of Iran) or the new US
administration.
7. On 7 February 1989, PS/Mr Waldegrave responded to the letter
from PS/Mr Clark. This letter:
- records that it was important to retain flexibility in applying
the existing Guidelines in the light of the ceasefire and agreed
that the revised Guideline (iii) should be used on a trial basis
by officials for this purpose.
- records that Mr Waldegrave was content for a more liberal policy
[ie replacing the existing Guidelines] to be implemented without
a public announcement;
- sets out a basis for responding to PQs which would describe the
way in which defence export licence applications were being
considered: "The Guidelines on the export of defence equipment
to Iran and Iraq are being kept under constant review, and are
applied in the light of the ceasefire and developments in the
peace negotiations."
- records Mr Waldegrave's suggestion that, if Lord Trefgarne was
content, this approach should be put to their respective
Secretaries of State.
8. In the event, Lord Trefgarne did not respond to this letter
before the fatwah against Salman Rushdie was declared by Iran on 14
February 1989. As a result of the fatwah, the future of Britain's
trading relationship with Iran was put into question, and Lord
Trefgarne delayed responding to the proposals set out in the letters
from PS/Mr Clark and PS/Mr Waldegrave pending guidance from the FCO
on this issue. In the meantime, all decisions on export licences for
Iran were deferred.
9. Guidance from the FCO was issued in the form of a letter from Mr
Waldegrave to Alan Clark and Lord Trefgarne on 28 March 1989. This:
- noted the need to review the position in relation to Iran.
- noted that it had been agreed in February that the existing
Guidelines were to remain in place with the new wording of
Guideline (iii) being used to interpret them in the light of the
ceasefire.
- said that the Government's response to the Iranian fatwah was
still being considered (trade embargoes being one possible
option).
- proposed that the more flexible interpretation of the Guidelines
should not be applied in respect of Iran and that decisions on
all licence application for exports to Iran should be deferred
until March-April 1989 in case wider trade restrictions on Iran
were deemed necessary.
10. Lord Trefgarne signalled his agreement to these proposals for
Iran in his letter to Mr Waldegrave of 13 April. However, Mr Clark
wrote expressing reservations on the approach to Iran and a meeting
between the three Ministers was arranged for 24 April 1989, to
discuss how the guidelines should be implemented in the light of both
the ceasefire and the fatwah. The outcome of this meeting was set
out in a letter from Mr Waldegrave to Mr Clark and Lord Trefgarne of
27 April. This recorded the agreement of the three Ministers to:
"continue to interpret the guidelines more flexibly in respect
of Iraq, as we have done in practice since the end of last year;
but that we should revert to a stricter interpretation for Iran,
along the lines which operated before the ceasefire."
This approach was endorsed by the Foreign and Commonwealth Secretary
on 3 May 1989.
11. Mr Waldegrave's letter also set out a form of words for use in
response to PQs:
"The Guidelines on the export of defence equipment to Iran and
Iraq are kept under constant review, and are applied in the
light of prevailing circumstances, including the ceasefire and
developments in the peace negotiations."
This form of words clearly indicated that the ceasefire and progress
in the peace negotiations were factors being taken into account when
applications for exports to Iran and Iraq were being considered, and
that other "prevailing circumstances" were similarly taken into
account (and Members of Parliament in 1989 would readily have
identified the fatwah as such a "prevailing circumstance"). The
answers given to Parliamentary Questions therefore gave an accurate
description of the Government's policy on exports to Iran and Iraq at
the time. There was no question of Parliament being deliberately
misled about this policy, or about the factors which influenced the
application of the policy.
12. Subsequent correspondence between the departments concerned
makes it clear that the Government's policy of interpreting the
existing Guidelines in the light of the ceasefire and the fatwah
remained in place until the invasion of Kuwait and the imposition of
sanctions against Iraq. A number of further moves were made to reach
agreement on a substantive change in the Guidelines, but no changes
were made. External events continued to prevent this. These events
included: concerns over the Iraqi chemical and nuclear weapons
development and the detention of Daphne Parish and Farzad Bazoft in
October 1989; and the execution of Mr Bazoft and the "nuclear
triggers" and "supergun" affairs in March - April 1990. The latter
events led to the adoption of a more restrictive interpretation of
the Guidelines in respect of Iraq.
13. The UK's policy on defence sales to Iran and Iraq was considered
by an ad hoc meeting chaired by the Foreign and Commonwealth
Secretary on 19 July 1990. The meeting agreed that the ban on lethal
equipment should remain in place but that a substantive change to the
Government's policy on other defence related exports to Iran and Iraq
should be made. It was also agreed that this change would be
announced to Parliament in a Written Answer. However, shortly after
the meeting a dispute between Iraq and Kuwait over oil production
developed, and apart from those industrial goods which had recently
been excluded from control under an international agreement known as
"COCOM", the Foreign and Commonwealth Secretary recommended, and the
Prime Minister agreed, that the review of policy should not take
place until the then current tension between Iraq and Kuwait had been
resolved. On 2 August 1990, Iraq invaded Kuwait and full economic
sanctions were applied.
