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Realization and Implementation of Export Regulations Tightened since 1990/92 in Export-Oriented Companies in Germany

By Dr. oec. Hans A. Kolb

Director of the International Department

Chamber of Industry and Commerce

Obninsk, April 2002

Germany has a long history of exporting armaments. For example, between 1971 and 1975, the German Democratic Republic exported armament products in the amount of $22.44 billion (compared to imports of $43.15 billion); between 1976 and 1980, this increased to $50.75 billion (compared to imports of only $12 billion).

However, German armament exports are higher than these statistical figures indicate. These figures only include direct and indirect exports i.e. resulting from international cooperation, such as MRCA tornados from Great Britain or the antiaircraft system Roland from France. The export of dual-use technologies, which are a significant piece of armament exports, have not been incorporated into the export statistics but they need to be accounted for.

Dual-use technologies are defined as products that can be utilized in both the civil and military sectors. Dual-use products do not become subject to authorization as products themselves (as is obvious in the case of other armament exports like ammunition or tanks) but through their intended use. For example, simple window glass for civilian residences becomes a dual-use product if it is found in a weapons factory. A flatbed truck for a construction site can be dual-use if a tank is to be transported with it. A well-known example of this was the export of a pesticide factory in the 1980s to Samarra in Iraq, which was allowed because it was an item designed for the civilian sector, but which was turned into a poison gas factory.

The question then becomes, how does an entrepreneur know what he may export and what not? Which statutory regulations does he have to observe?

The legal basis in the Federal Republic of Germany for any type of foreign trade activities is the Foreign Trade Law (AWG), which was instituted on April 28, 1961. This law stipulates the regulations of foreign trade in Article 1: "In principle, the product, services, capital, monetary, and other trade transactions with foreign economical territories as well as foreign currency and gold traffic between residents of foreign countries is free. " However, in the same place a reference to restrictions can already be found, which - under the aspect of the meeting today - are defined in Article 7: "Protection of Security and of Foreign Interests." According to this, "legal and foreign trade transactions" can be restricted to

  1. Guarantee the security of the Federal Republic of Germany;
  2. Prevent a disturbance of the peaceful coexistence of people; or
  3. Prevent that the foreign connections of the Federal Republic of Germany are considerably disturbed.

For about 15 years, the federal government has been observing with concern that developing countries, especially Middle Eastern countries, are making efforts towards improving their military armament with help from German enterprises.

According to a statement by Dr. Hans Hermann, Director of the German Intelligence Service (BND), at the present time Iraq, Sudan, and Libya, in particular are trying to sidestep export controls by processing their transactions via other countries.

Export control of conventional weapons of war, e.g., tactical airplanes, tanks, ships, cannons, or machine guns, is relatively simple in Germany, since these weapons are under federal control from the onset of their manufacture. When comparing the overall export values of these products with those of France or Great Britain, for instance, it becomes evident that Germany is restricting its exports significantly. As a result, no weapons from Germany were found in Iraq's well-equipped military at the time of the Persian Gulf War.

During the Cold War, the foremost goal was to prevent uncontrolled, strategically important technology exports to certain countries, especially those of the involved in the Warsaw Pact. Nowadays, countries of the developing world are the focus of the export controller's scrutiny. These countries not only want to build poison gas factories, but they also want to possess their own nuclear weapons. Here again, many procurement activities are concentrated in Germany. This is also true for missile technology, as many weapons are ineffectual without associated missiles.

The Federal Export Agency, which was established specifically for the control of illegal technology transfer, has assumed a difficult task. With every incident, even if it is not as egregious as the delivery of a poison gas factory to Rabta in Libya in early 1989, has resulted in a further tightening of legal norms and control procedures.

Since 1990, the following amendments to the German Federal Weapons of War and Foreign Trade Laws have been made to tighten controls on exports:

  • Fifth Amendment of the Foreign Trade Law, effective on July 20, 1990.
  • Sixth Amendment of the Foreign Trade Law, effective on July 20, 1990.
  • Law to Improve Monitoring of Foreign Trade and Prohibition of Nuclear, Biological, and Chemical Weapons, effective on November 5, 1990. This is probably the most important amendment. Until then, the production of nuclear, biological, and chemical (NBC) weapons was not prohibited under the Weapons of War Control Law, but only subject to authorization. In the case of Germany, however, it has to be taken into account that due to the Federal Republic of Germany's allegiance to international treaties, authorizations were in actuality barred. However, loopholes in this legal position existed. That is to say, a violator could only be the person who would have needed the authorization, i.e. the factory owner. The technicians without whose help the production would have never been carried out were not penalized.

    To close those legal loopholes, the following was resolved:

    1. The production of NBC weapons is now prohibited in the country; also, the option for authorization does not exist anymore.
    2. In addition to the factory owner, legal action can be taken against all employees.
    3. Even the thoughtless encouragement of production of NBC weapons is under severe threat of punishment (for example the delivery of tiles or air-conditioning systems for a poison gas factory).
    4. These penalties are also applied to the actions of German citizens in foreign countries.
  • Amendment to the Foreign Trade Law, Penal Code, and Other Laws, effective on February 28, 1992. Here, the most important aspect is the authorization to monitor telecommunications. The Customs Crime Bureau is now allowed to intercept phone calls with the approval of the court. A separate offence has been established for violations of United Nations embargos.
  • Eighth Amendment to the Foreign Trade Law, effective on August 9, 1994.

Despite all the tightening of the laws, however, there will always be attempts to circumvent these regulations. Therefore, to further increase the responsibility of companies, the law required the appointment of an export trade officer, who has to be nominated by company management.

Doesn't the real problem of export violations lie elsewhere? Regrettably, many companies attempt questionable transactions in order to secure their very existence through the significant income from such illegal transactions. Often, the profits from export violations are the only way for a researcher to maintain his own financial security.

In Russia, for example, this was emphasized in a recent press release. According to announcements, Russia will increase its spending for the sciences, to a total of four percent of its national budget. Russian leadership wants to make sure that its country will continue to be counted as one of the leading scientific nations of the world. Unfortunately, most Russian universities and research institutes are still living on the basis of knowledge accumulated during the Soviet regime. However, the number of scientists in Russia has been cut in half in the past ten years. Subsequently, under the direction of President Vladimir Putin, a number of new measures aimed at putting Russia back on the leading scientific edge were adopted at a conference in the Kremlin that was comprised of several federal committees. President Putin confirmed that too many young, top-class university graduates leave Russia because of poor working conditions and miserable salaries. Currently, even the Academy of Sciences, under its president Jurij Ossipow, is not certain just how many Russian research institutions are still performing useful work.

This is the starting point for increasing the safety of our world. It is not the tightening of laws that will ultimately prevent the worldwide trade of dangerous weapons (which becomes increasingly easier with more open borders), but the increased ethical attitude of manufacturers and researchers.

Despite the abovementioned press release, it is still an open question of whether or not the requested resources will actually flow into the Russian research institutes, since the country has only one fifth of the sum at its disposal. Nonetheless, this is an important starting point for the future of world peace.

Mutual trust of the world powers regarding the good will of others - not categorizing countries into "Powers of Evil" - will help us move forward. How many times in the last century was the earth close to destruction, while the two superpowers and their allies faced each other with cold ruthlessness? Didn't nuclear weapons already exist in such amounts that the world could have been destroyed several times over? This remains true even without any further export of any type of weapons!

Wasn't it Mikhail Gorbachev, who in October of 1986 in Iceland, offered a complete abolishment of nuclear weapons to U.S. president Ronald Reagan? Didn't this first attempt at establishing world peace, originate from the alleged "Evil Empire," which had already recognized that the arms race in actuality stole from its people instead of protecting them? Don't we owe Germany's reunification and the fall of the Iron Curtain to this way of thinking?

Today, there are still world powers, such as the U.S., Russia, and China. It still has leading industrialized nations, and poor countries that are in need of help by the wealthy nations. We will all continue to exist only if we manage to eliminate the borders between us; when trust replaces control.

As a the great Finn Urho Kekkonen, who spent most of his life straddled tensely between the Eastern and Western Blocs, once said: "Security is not achieved by putting up fences; security is gained by opening doors."




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