EU targets China for weapons profit

Political finesse and the thirst for profit are the main forces behind the drive to scrap the European Union's ban on arms sales to China, imposed after the Tiananmen Square killings of June 1989.

Many countries voiced dismay after the EU, in a summit last December, set its sights on a decision by its 25 members for scrapping the embargo by June 30.

Critics say the move, leaving the United States as the last major country with export curbs, sends the wrong signal to a country long criticised for its treatment of political dissidents and its record in Tibet.

Others maintain it will fuel instability in East Asia, sparking an arms race between China, Japan and South Korea and lowering Chinese inhibitions about bullying Taiwan, which Beijing regards as a breakaway province.

For the US, "which plays the role of guarantor of stability in that region, it simply sends the wrong message - at a time of rising Chinese military expenditure - to lift the arms embargo," US Secretary of State Condoleezza Rice said.

China last week earmarked a 12.6 per cent increase in military spending this year, the equivalent of nearly US$30 billion ($40.87 billion), and adopted a law authorising the use of force against Taiwan if it moved towards independence.

Within the EU, though, officials say China's record on human rights has improved as the country has become more prosperous and concerns about European threats to regional instability are overblown.

"We believe that this embargo is obsolete in view of the new realities in China and the partnership we want to see between the EU and China in particular," a spokesman for the French Foreign Ministry said.

"Today's China is no more the China of the Tiananmen, although a lot remains to be done for the future," said EU external relations commissioner Benita Ferrero-Waldner.

She insisted the EU had no intention of doing anything that would change the balance in East Asia.

The safeguard would be a strengthened version of the EU's 1998 self-imposed code of conduct, under which states pledge to block the export of equipment "which might be used for internal repression or international aggression, or contribute to regional instability."

The arms industries of the small but powerful group of countries which want the ban lifted, led by France, Germany and Italy, are under intensifying pressure in export markets.

They look balefully at the present restrictions and imply US hypocrisy. Russia - a country on which President George W. Bush looks benignly - and the US ally Israel sell China arms it cannot make itself, including jet fighters and submarines.

France is the world's third biggest arms exporter after the US and Britain, according to the French Defence Ministry. Sales in 2003 were 4.3 billion euros ($7.7 billion), after 4.2 billion in 2002.

Experts say one lucrative area of military sales for Europe lies in reconnaissance satellites, radar and radio equipment.

French Defence Minister Michele Alliot-Marie suggests that selling China these systems could prevent China from developing them itself.

Washington conservatives scorn that idea, and some see the embargo plan as an EU attempt to rival the US, economically and politically.

"The Europeans are looking to China to provide investments in defence sectors so they can remain competitive against the Americans," said Richard Fisher, of the US think-tank the International Assessment and Strategy Centre.

But a senior EU source says it is senseless to place China in the same category as Myanmar, Sudan and Zimbabwe, the only other countries in the EU's group of arms pariahs.

Many EU countries feel that this is hardly the smartest way of dealing with a major power, whose record on human rights has progressed significantly, according to this source. Constructive engagement with China is yielding much better results than confrontation, the source says.

Will the embargo be scrapped? There remains considerable opposition. A group of northern EU members is still campaigning against a lift. US pressure remains intense, with pro-Taiwan members of Congress talking about trade restrictions on the EU if the proposal goes ahead. The European Parliament has voted for the embargo to remain, although that is for Governments, not the EU Assembly, to decide. But the tide is clearly turning. Britain, which backed the US line, has turned tail.

The adoption of Beijing's anti-secession law was greeted with equanimity in Brussels. EU foreign policy chief Javier Solana said the law had generated "complicated atmospherics" around the embargo plan but the scheme remained on track.

"The commercial pragmatists are winning," the London-based Financial Times commented. "The reality in Europe is that everyone wants to do business with China and no one wants to be left behind."


The arms race

Years of high tensions have sparked an arms race across the Taiwan Strait.

China has steadily boosted defence spending to modernise its military, developing short-range missiles and buying high-tech arms from abroad.

China plans a 12.6 per cent, or US$30 billion, increase in military spending this year.

Taiwan is considering a US$15 billion arms budget to buy submarines, anti-missile systems and submarine-hunting aircraft aimed at warding off a mainland attack.

- REUTERS