Treasury plans to shut arms sales department

According to an article in the Guardian on 9th July, the Treasury is planning to disband the government's controversial arms sales department, the 450-strong Defence Export Services Organisation (DESO).

Former Treasury cabinet minister Stephen Timms launched proposals earlier this year to close down the secretive unit on the grounds that it subsidises profitable weapons giants such as BAE Systems, Britain's biggest arms firm. The Treasury's industrial productivity section argued that the taxpayer should not continue to subsidise an "anachronistic" department which had gained too much influence within Whitehall.

DESO, set up in 1966 when the arms industry was largely state-owned and was mainly concerned with selling off surplus equipment, spends 15m a year directly on helping British arms firms to sell equipment abroad. It also lobbies within Whitehall for export licences for sales to sometimes controversial regimes. Opponents say no other British industry is supported by such a large government-funded machine and that DESO, which is always headed by an arms company executive, relentlessly promotes the industry's interests within the government.

The British arms industry sells around 5bn of equipment a year to foreign governments with the help of DESO, which organises arms fairs and marketing campaigns. The firms pay discounted fees for these services, but Treasury officials question why the companies cannot do this themselves or pay the full rate.

News of the Treasury initiative comes at an awkward time for DESO, which is accused of approving 1bn payments to Prince Bandar of Saudi Arabia from BAE. DESO runs the Al Yamamah arms deal for Saudi Arabia in return for a 2% commission. The Saudi transactions are now being investigated by the US justice department after Tony Blair ordered a British police inquiry to be closed down on alleged grounds of "national security".

According to its web site, the Campaign Against the Arms Trade has asked the Government to confirm the report. (see www.caat.org.uk )