End-Use Monitoring Regime

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The United States has always been very apprehensive of its exported defence equipment falling in the hands of elements inimical to US interests. The inability of the US Government to account for all the exported Stinger shoulder-fired anti-aircraft missiles has been a major cause for alarm. There is the ominous possibility of some of the unaccounted missiles finding their way to terrorists for use against civilian aircraft. Such concerns have forced the US Government to further tighten its regulatory framework. The Arms Export Control Act (AECA) and the Foreign Assistance Act (FAA) require that defence articles and services can only be transferred to countries and international organisations for purposes of internal security, legitimate self defence, and regional security arrangements. The US Government has a constant obligation (from the time of transfer until eventual disposal) to make certain that its exported defence articles/services are used strictly as per the initially stated intent. Changes, if any, are to be intimated to the US which retains the right to veto the contemplated changes. Additionally and more importantly, the US retains right of ground inspection for physical verification of equipment.

Sale/Transfer of US Equipment

The US exports military equipment and services through Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). Though subjected to the same licencing regime, they have distinct characteristics.

FMS is generally known as a government-to-government deal. This route is generally followed in respect of the items that have already been inducted in the US forces. India bought Weapon Locating Radars through this route. The buyer nation forwards a Letter of Request to the US Government. If the request is cleared, a Letter of Offer is sent to the requesting Government. The buying Government is required to submit a Letter of Acceptance that includes terms and conditions as dictated by the US laws for acceptance by purchasing the buyer.

On the other hand, DCS are pure commercial transactions between a buyer government and the industry. The role of the US Government is limited to the grant of licence, as per the sensitivity of technology involved, by the Office of Defence Trade Controls of the State Department.

The US Government also provides equipment on lease for a period up to five  years. It is always a case specific agreement, generally to meet an immediate requirement of the indenting nation till bulk procurements materialise. Additionally, stocks held in excess of the requirements of the US forces are also offered at highly reduced rates (5 to 50% of original cost) to selected countries.

The US Statutes

Section 40A of the AECA, mandates that end-use of defence articles and services which are sold, leased or exported must be monitored by the US security agencies. In 1996, Section 40A of the AECA [22 U.S.C. 2785] was amended to include a new requirement – “to the extent practicable, a programme shall be designed to provide reasonable assurances that the recipient is complying with the requirements imposed by the United States Government with respect to the use, transfers, and security of defence articles and monitoring of US arms transfers, and security of defence articles and services.” AECA also calls upon the President to develop standards for identifying high risk exports for regular end-use monitoring (Section 38(g)).

Restrictions for FMS exports are equally stringent. No retransfers are permitted without Presidential consent. Use is limited to what was mentioned in the sale agreement. Restrictions on the use of equipment transferred as a grant are much stricter. The equipment can be used only by government employees. The equipment has to be returned to the US when no longer required.

Blue Lantern for Commercial Sales

‘Blue Lantern’ was initiated in September 1990 by the Department of State under Section 40A of AECA to put into practice end-use monitoring of commercial exports of equipment and services which are subject to licencing under Section 38 of AECA. It was the first methodical and institutionalised end-use verification programme. The ‘Blue Lantern’ programme is widely considered to be a success as it has proved its efficacy in strengthening export controls and in preventing inadvertent export of military equipment and technologies to rogue elements. It deters diversions and helps in preventing illicit supplies to grey arms markets. It also helps the Department of State to make informed licensing decisions and ensures compliance with the AECA and the ITAR.  It facilitates end-use verifications which entail pre-licence scrutiny and post-shipment checks to ensure compliance of contract provisions.

As it is not possible to carry out hundred percent checks, transactions which are vulnerable to misuse and diversion are selected as priority targets. Exports involving certain sensitive technologies like night vision devices, cruise missiles, remotely piloted vehicles and electronics are given special attention. Close to 500 ‘Blue Lantern’ checks are carried out annually and reports of suspect cases are submitted to the State Department, which may order further intensified monitoring.

‘Golden Sentry’ for Foreign Military Sales

Consequent to the amendment of 1996, all Foreign Military Sales agreements after 29 Nov 1999 necessarily contain a provision granting right to the US to verify credible reports regarding the use of exported equipment for purposes other than those agreed upon. In pursuant of this requirement, the US Defence Security Cooperation Agency (DSCA), that is responsible for exports under FMS, established ‘Golden Sentry’ End Use Monitoring (EUM) programme to formalise verification procedures. ‘Golden Sentry’ covers the entire spectrum equipment export i.e., shipping, receiving, use and final disposition. It is generally called ‘cradle-to-grave’ monitoring.

The primary goal of ‘Golden Sentry’ is to ensure authorised use and legal transfer of exported military hardware and its lifetime accountability; whereas the overall objective is to minimise security risks to the US interests through compliance with arms transfer provisions supporting the US national security and foreign policy objectives. It categorises and tracks all exported items under FMS by their serial number on a country by country basis. It is designed to provide assurance that the recipient is complying with the US Government regulations as regards end-use verification of sensitive technologies vulnerable to diversion or misuse.

Additionally, EUM ensures continued US pre-eminence and global competitiveness by denying access to potential adversaries to cutting edge military technology. Regular monitoring prevents the host nation from acquiring technology by reverse engineering and other means. It thus, helps in the furtherance of US defence-industrial base. ‘Cradle-to-grave’ monitoring facilitates prevention of proliferation of weapons of mass destruction as well.

DSCA has issued detailed instructions covering the complete gamut of activities spanning ‘Golden Sentry’ programme. Elaborate procedures have also been evolved to make it achieve its stated purpose. Guidelines have been issued for monitoring, verification, documentation and reporting to streamline the whole process and make it responsive to changing environment.

Level of monitoring depends on the sensitiveness of the equipment and the degree of trust in the host country:-

• Routine EUM. It applies to trusted partners who are expected to demonstrate support for US principles, laws, regulations and practices with respect to the utilisation of exported equipment. It presupposes strict adherence by the host country to the terms of sale contract, especially with respect to third party transfers. The host nation has to consistently prove itself trustworthy by maintaining good interface and by putting in place an effective system of checks/inspections for proper accountability. Should the EUM personnel feel differently, matter is reported to the US Government for initiating appropriate measures, which may vary demarche to sanctions.
• Enhanced EUM. In the case of sensitive defence equipment and services, agreements contain specific provisions for greater physical security and accountability. DSCA team visits are planned to ascertain compliance contingent on ‘trust with verification’ and willing enforcement. The underlying aim is to minimise risks of violations, deliberately or by default.

There are three types of EUM visits with specific objectives:-

• EUM Familiarisation Visit. It helps to develop effective EUM compliance plans in consultation with the host nation. It aims to apprise and advise the host country with regard to the security and accounting practices required to be put in place. Each EUM Familiarisation Visit is unique to the country and equipment being overseen. It also provides an opportunity to determine the need and mechanics of a future EUM Tiger Team Visit in that country.
• EUM Tiger Team Visit. The purpose of a EUM Tiger Team Visit is to review and evaluate overall EUM compliance with specific reference to physical security and accountability as per the provisions of sale agreements. EUM Tiger Team may visit facilities, carry out an appraisal of local security arrangements and review procedures with regard to regular monitoring. As these visits are country and equipment specific, they require advance planning. They are not intended to be surprise visits. Endeavours are made to time them with annual inventory stock-taking to avoid duplication of effort.
• EUM Investigation Visit. These visits are undertaken to investigate possible violations of Section 3 of the Arms Export Control Act and Section 505 of the Foreign Assistance Act. These are politically sensitive visits and have to be handled with care in concert with the State Department. They are generally prompted by intelligence and other reports indicating a likely violation of agreed terms of sale requiring compliance with US statutes.

Response to EUM

Many consider EUM to be a highly ambitious and impractical programme. They are of the view that the programme can achieve its stated aim only if hundred per cent inventory check is carried out annually. For that, massive funding and other resources will have to be made available.

Reaction of host nations to the US EUM programmes varies from negative to supportive. Although some suspect a hidden US agenda, most of the nations appreciate US concerns and are ready to cooperate. They, however, feel that the US Government must trust them more and accept their internal checks as well. Their basic opposition stems from the fact that inspection by another country impinges on their sovereignty and hurts their pride.

The US Government is aware that EUM visits, if handled, with insensitivity can spoil its military to military relations. It has, therefore, been making concerted efforts to allay apprehensions of its allies, especially the European countries who are very wary of such external monitoring. Having failed to dispel all reservations, the US has issued instructions to its EUM teams to demonstrate respect for the host nation’s sovereignty and to make the visits as non-intrusive as possible.

Implications for India

For India, FMS route is ideal in respect of high-tech systems, which no other nation possesses or is ready to offer. This route is also better for complex weapon systems as India can get them duly integrated and configured. FMS route has the additional advantages of fixed prices, sovereign guarantees and after sale support.

However, while contracting US equipment through FMS route, India will do well to factor in a number of important aspects which have long term implications:-

• One of the stated aims of EUM programme is to encourage foreign government support for US principles, laws, regulations and practices. It implies a certain degree of coercion. A nation getting US equipment is expected to fall in line with US policies and support them. It does affect a country’s freedom to pursue policies as perceived in its own national interests.
• If equipment has been purchased for the Army, its transfer to, say Indian Navy or the Border Security Force can be done only after obtaining concurrence from the US Government. In other words, even after having fully paid for the equipment, its usage is dictated by the US – not a very comfortable arrangement.
• The buyer nation has to intimate the location of the equipment as also open its bases (where the said equipment is located) for inspection to the US. The US can demand ground inspection to reassure itself. It certainly compromises national security plans as deployment details of equipment reveal operational plans.
• EUM policy states that the US retains the right to verify ‘credible reports’ that such items have been used for purposes other than agreed upon. What are ‘credible reports’? Who vouches for their credibility? As has been repeatedly seen, governments the world over, exploit such phrases to justify a particular course of action. Much advertised ‘credible reports’ of Iraq possessing weapons of mass destruction is a case in point. It implies that the US Government can always demand additional probes quoting so-called ‘credible reports’.
• A recipient nation has to consistently prove itself to be worthy of US trust. That is a contractual obligation. On the other hand, there is no such commitment by the US Government to honour all provisions of the sale deed and who can abrogate a sovereign assurance by citing US laws and sanctions.
• Section 505 of the US Foreign Assistance Act 0f 1961 authorises US officials to attend military exercises to observe training. It is a significant provision as the observers get to learn recipient nation’s operational doctrine with regard to the exploitation of equipment and details of the formations assigned said equipment.

Conclusion

The US Government has put in place an elaborate system to ensure that their technologically-advanced equipment is not used in a manner detrimental to US interests. In the present milieu of distrust and confrontation, nations and even humanity can be held to ransom by a rogue organisation with clandestinely procured weapons.

The present US pre-eminence is due to its technology edge. The US wants to preserve this knowledge lead to ensure that its armed forces always enjoy the benefits of superior weaponry against their adversaries.

It is not that the US applies all stipulations across the board in all cases. These are empowering provisions which can be invoked, if the situation so necessitates. EUM programme is neither hostile in its intent nor is it India-centric. All export contracts, irrespective of recipient nations, contain these stipulations as standard terms of sale.

And finally, the US makes its statutory requirements known to every prospective buyer in explicit and unambiguous terms. It is for the buyer nation to consider all facets and take decision as per its perceived national interests. The same  applies to India as well.