On the normality and abnormality of offsets obligations

Defence offsets have often been described as government‐to‐business compensation arrangements or contracts involving “reciprocity beyond that associated with normal market exchange”. This paper argues that it is irrelevant and misleading to use this notion as a criterion for defining offsets.

The paper also explores the apparent inconsistency between the maximising efficiency in defence procurement and the application of offsets requirements. It is shown that defence offsets are a subset of all the price‐quality‐quantity trade‐offs which in general characterise negotiations surrounding complex transactions.

It is argued that although reciprocal or offsetting arrangements are a normal aspect of commercial transacting, the operation of certain offsets schemes namely mandatory offsets obligations, may inhibit the buyer's flexibility in negotiating deals and result in inefficient procurement. This leads us to ask why these offsets schemes have persisted for so long.     

A FOCUS ON SMALL ARMS

For much of the past two years, the African Union Mission in Sudan (AMIS) has managed to achieve a semblance of stability in much of Darfur, which has been reflected in the improvement of humanitarian conditions. At the same time, the mission has come under serious international pressure to respond appropriately to the deteriorating security situation on the ground by enhancing its presence and effectiveness. Subsequently, following the decisions of the AU Peace and Security Council (PSC), AMIS has undertaken two successive enhancements. Although the last enhancement exercise was remarkably successful, it could not be considered complete without the provision of the outstanding personnel and logistics by both member countries and the international partners. Meanwhile, serious challenges continue to undermine the mission's effectiveness and its prospects, not the least of these obstacles being adequate funding. At present, the mission is in a dilemma with respect to its mandate, engaging with the parties, partners, implementation of the N'sDjamena Humanitarian Ceasefire Agreement (HCFA), and the way forward, as the AU is now almost totally dependent on external donations to sustain its Darfur operations. This article therefore explores the way forward in all these thematic areas in order to make appropriate recommendations.     

Mandated defence offsets: can they ever deliver?

Defence offsets are elements of defence procurement deals additional to the primary content. Offsets are usually expected to yield technological or industrial benefits to the purchasing country (e.g. countertrade, technology transfers, or additional jobs) and military buyers often require suppliers to make offsets available “cost-free.” The authors argued previously that such strategies achieve little of value to buyers that lack market power and are unnecessary otherwise, since purchasers with the market power to extract more value for money from foreign suppliers can do so anyway. This article also focuses on the supply side of offset deals. The USA is the world's largest defence offsets supplier but the US government opposes offsets demands as economically inefficient and trade distorting. Even if offsets are inefficient and trade distorting, they may still benefit a materiel-exporting country such as the USA as they may induce exports and create associated benefits for the offsets provider.     

Country survey VI: Australia

Australia is a geographically large country, with the world's longest national coastline to defend, but a relatively small economy of some 17.5 million people. Since World War II, Australia has faced the dilemma of how to structure defence policy in the absence of an identifiable threat. Its policy of self‐reliance aims to permit Australia to conduct defensive operations in the event of low/medium level threats without depending immediately on its allies. This is to be achieved through the technological sophistication of defence equipment, a highly professional but small defence force and local industry support.

The burden of defence, measured as the share of defence outlay in GDP declined from about 3% in 1971–72 to about 2.3% in 1993–94. It has been the Government's policy to encourage the development of local defence‐related industry, in particular in areas such as: electronics/optics; communications and information technology; aerospace; shipbuilding and repair, munitions; and land vehicles. However, defence procurement has a small impact on the Australian economy as a whole.     

Violence,Legitimacy, and Control: The Microdynamics of Support Relationships between Militant Groups and their Social Environment

When police moved against a mosque known to be a stronghold of al-Jamaa al-Islamiyya (The Islamic Group) in a neighbourhood in northeastern Cairo in summer 1988, they quickly became involved in street battles in which they were confronted not only by members of the militant Islamist group but also by many ordinary residents, including teenagers and elderly women throwing stones from balconies. It was obvious that the group had built a considerable base of support in the area: ‘They were very good young people’, one resident explained. The Islamists ‘used to have very active social work around their mosque. […] They collected donations for needy families and intervened in family disputes;’ and people, as he recounted, ‘admired their bravery to voice something the government does not want’ (Interview with residents of Ayn Shams, Cairo, March 2005). Yet, the resistance proved short-lived. When the neighbourhood was put under a curfew after the riots, people gradually withdrew from the group and many young followers shaved and changed their white galabiyya for a pair of trousers.     

Swedish–Finnish naval cooperation in the Baltic Sea: motives,prospects and challenges

Recently, Finland and Sweden decided to substantially deepen their defence cooperation and this project involves creating a bilateral standing Naval Task Group (SFNTG). The present article aims at examining the deepening naval cooperation between Finland and Sweden from a regional integration perspective, focusing on its motives, current challenges and future prospects. Driven by perceptions of common challenges and desires for cost-effectiveness, and strengthened by recent successes on sea surveillance and a combined Amphibious Task Unit, the bilateral project has considerable potential to achieve success. To fulfil its objectives, substantial legal changes in both countries are required to allow the use of force on each other’s territorial waters. To cater for the requirement of not conflicting with EU, NORDEFCO or NATO cooperations, the bilateral Task Group must operate according to NATO standards and by using English as the language in command and control. The costs of adjusting the naval units to NATO’s technical requirements are far from negligible and this issue still remains to be solved. If Finland and Sweden manage to incorporate new policies, common structures and common organisational norms among their navies, an even deeper integration, as in Belgium and the Netherlands, are conceivable.