Obama rolls back limits on arms exports

Critics, including some who have worked on enforcing arms export laws, say the changes could undermine efforts to prevent arms smuggling to Iran and others

The United States is loosening controls over military exports, in a shift that former U.S. officials and human rights advocates say could increase the flow of American-made military parts to the world’s conflicts and make it harder to enforce arms sanctions.

Come Tuesday, thousands of parts of military aircraft, such as propeller blades, brake pads and tires will be able to be sent to almost any country in the world, with minimal oversight – even to some countries subject to U.N. arms embargos. U.S. companies will also face fewer checks than in the past when selling some military aircraft to dozens of countries.

Critics, including some who’ve worked on enforcing arms export laws, say the changes could undermine efforts to prevent arms smuggling to Iran and others.

Brake pads may sound innocuous, but “the Iranians are constantly looking for spare parts for old U.S. jets,” said Steven Pelak, who recently left the Department of Justice after six years overseeing investigations and prosecutions of export violations.

“It’s going to be easier for these military items to flow, harder to get a heads-up on their movements, and, in theory, easier for a smuggling ring to move weapons,” said William Hartung, author of a recent report on the topic for the Center for International Policy.

In the current system, every manufacturer and exporter of military equipment has to register with the State Department and get a license for each planned export. U.S. officials scrutinize each proposed deal to make sure the receiving country isn’t violating human rights and to determine the risk of the shipment winding up with terrorists or another questionable group.

Under the new system, whole categories of equipment encompassing tens of thousands of items will move to the Commerce Department, where they will be under more flexible” controls. Final rules have been issued for six of 19 categories of equipment and more will roll out in the coming months. Some military equipment, such as fighter jets, drones, and other systems and parts, will stay under the State Department’s tighter oversight.

Commerce will do interagency human rights reviews before allowing exports, but only as a matter of policy, whereas in the State Department it is required by law.

The switch from State to Commerce represents a big win for defense manufacturers, who have long lobbied in favor of relaxing U.S. export rules, which they say put a damper on international trade. Among the companies that recently lobbied on the issue: Lockheed, which manufactures C-130 transport planes, Textron, which makes Kiowa Warrior helicopters, and Honeywell, which outfits military choppers.

Overall, industry trade groups and big defense companies have spent roughly $170 million over the last three years lobbying on a variety of issues, including export control reform, a ProPublica analysis of disclosure forms shows.

The administration says in a factsheet that “spending time and resources protecting a specialty bolt diverts resources from protecting truly sensitive items,” and that the effort will allow them to build “higher fences around fewer items.” Commerce says it will beef up its enforcement wing to prevent illegal re-exports or shipments to banned entities. The military has also supported the relaxed controls, arguing that the changes will make it easier to arm foreign allies.

An interview with Commerce Department officials was canceled due to the government shutdown, and the State Department did not respond to questions.

The shift is part of a larger administration initiative to update the arms export process, which many acknowledge needed to be streamlined. But critics of the move to Commerce say that decision has been overly driven by the interests of defense manufacturers.

“They’ve cut through the fat, into the meat, and to the bone,” said Brittany Benowitz, who was defense adviser to former Senator Russ Feingold, D-Wisc., and recently co-authored a paper on the pending changes.

“I think it’s fair to say that the views of the enforcement agencies and actors charged with carrying out the controls haven’t won the day,” said Pelak, the former Justice Department official.

Current controls haven’t prevented the U.S. from dominating arms exports up to now: In 2011, the U.S. concluded $66 billion in arms sales agreements, nearly 80 percent of the global market. The State Department denied just one percent of arms export licenses between 2008 and 2010.

At a recent hearing, a State Department official touted the economic benefits, saying the “defense industry is going to become even more competitive than they are already.”

Under the new policy, military helicopters, transport planes and other types of military equipment that typically need approval may be eligible for license-free export to 36 allied governments, including much of Europe, Argentina, Japan, South Korea, and New Zealand.

According to Colby Goodman, an arms-control expert with the Open Society Policy Center, once an item is approved for that exemption, it’s not clear that there will be any ongoing, country-specific human rights review. (The State Department hasn’t yet responded to our request for comment on that point.)

Goodman is particularly concerned about Turkey, where in the last year authorities violently suppressed protests and “security forces committed unlawful killings,” according to the most recent State Department Human Rights report.

Under the new system, some military parts can now be sent license-free to any country besides China, Cuba, Iran, North Korea, Sudan or Syria. Other parts that are deemed not “specially designed” for military use, while also initially banned from those countries, have even fewer restrictions on re-exports.

Spare parts are in high demand from sanctioned countries and groups, which need them to keep old equipment up and running, according to arms control researchers. Indonesia scrambled to keep its C-130s in the air after the U.S. blocked exports for human rights violations in the 1990s. In a report on trade in arms parts, Oxfam noted that by the time of the 2011 NATO intervention in Libya, Muammar Qaddafi’s air combat fleet was in dire shape, referred to by one analyst as “the world’s largest military parking lot.”
Goodman said Congolese militia members may be using aging arms that the U.S. sold decades ago to the former Zaire.

Pelak says the changes will make enforcement harder by getting rid of part of the paper trail as parts and munitions exit the U.S.: “When you take away that licensing record, you put the investigation overseas.” His office handled dozens of cases each year in which military items had been diverted to prohibited countries. The Government Accountability Office raised concerns last year about Commerce’s enforcement abilities as it takes control of exports that once went through the State Department.

The president is authorized – in fact, required – to revise the list of items under State Department control. But the massive shift to Commerce means that laws and regulations that were designed with the longstanding State Department system in place may now be up to presidential prerogative.

Vetting for human rights compliance is one such requirement. The Commerce Department said it will also continue to publicly report the sales of so-called “major defense equipment.”

Other laws may not get carried over, however. For example, if firearms are moved to Commerce, manufacturers may no longer have to notify Congress of foreign sales.

Several organizations, including the Center for International Policy, the Open Society Policy Center, and the American Bar Association’s Center for Human Rights, have called on the administration to hold off moving some military items from the State Department, and have asked Congress to apply State’s reporting requirements and restrictions to more of the military items and parts soon to be under Commerce control.

In one area, the administration does appear to have temporarily backed off – firearms and ammunition. Any decision to loosen exports for firearms could have conflicted with the president’s call for enhanced domestic gun control.

According to a memo obtained by the Wall Street Journal last spring, the Departments of Justice and Homeland Security both opposed draft versions of revisions to the firearms category. (The Justice Department press office is out of operation due to the government shutdown, and the Department of Homeland Security did not respond to requests for comment.) Shifting firearms was also likely to be a lightning rod for arms control groups. As the New York Times’ C.J. Chivers has documented, small arms trafficking has been the scourge of conflicts around the world.

Draft rules for firearms and ammunitions were ready in mid-2012, according to Lawrence Keane, general counsel for the National Shooting Sports Foundation, a trade group for gun manufacturers. The Commerce Department even sent representatives to an industry export conference to preview manufacturers on the new system they might fall under.

But since the school shooting in Newtown, Conn., last December, no proposed rule has been published.

Keane thinks the connection is irrelevant. “This has nothing to do with domestic gun control legislation. We’re talking about exports,” he said. “Our products have not moved forward, and we’re disappointed by that.”

The defense industry has long pushed for a loosening of the U.S. export controls. Initial wish-lists were aimed at restructuring and speeding up the State Department system, where the wait for a license had sometimes stretched to months. The current focus on moving items to Commerce began under the Obama administration.

The aerospace industry has been particularly active, as new rules for aircraft are the first to take effect. Commercial satellites had been moved briefly to Commerce in the 1990s, but when U.S. space companies were caught giving technical data to China in 1998, Congress returned them to State control. Last year, satellite makers successfully lobbied Congress to lift satellite-specific rules that had kept them from being eligible for the reforms.

Newer industries want to cash in, too. Virgin Galactic wrote in a comment on a proposed rule that the “nascent but growing” space tourism industry was hindered by current rules. At a conference in 2011, the chief executive of Northrup Grumman warned of “the U.S. drone aircraft industry losing its dominance” if exports weren’t boosted. (Drones are regulated under missile technology controls, and are mostly unaffected by the current changes.)

Lauren Airey, of the National Association of Manufacturers, named two main objections to the current system. First off, fees: Any company that makes a product on the State Department list has to be registered whether or not they actually export, with yearly costs starting at $2,500. There’s no fee for the Commerce list.

Secondly, any equipment that contains a listed part gets “lifetime controls,” Airey said. If a buyer wants to resell something, even for scrap, they need U.S. approval. (For example, the U.S. is currently debating whether to let Turkey re-sell American attack helicopters to Pakistan.) Under Commerce, “there are still limitations, but they are more flexible,” Airey said.

Airey’s association (and other trade groups) makes the case that foreign competitors are “taking advantage of perceived and real issues in U.S. export controls to promote foreign parts and components – advertising themselves as State-Department-free.” Airey demurred when asked for an estimate on the amount of business lost: “It’s hard to put a number directly on how much export controls cause U.S. companies to be avoided.”

An Aerospace Industries Association executive noted at a panel this spring, “We really did not move the needle at all by complaining about the fact that we weren't making as much money as we wanted to.”

But at a recent hearing of the House Committee on Foreign Affairs, members of Congress highlighted economic impact.

“In my district in Rhode Island,” said David Cicilline, D-R.I., “as many of our defense companies are looking to expand their business, really, to respond to declines in defense domestic spending, international sales are becoming even more important and really critical…to the job growth in my state.”

William Keating, D-Mass., said that “with declining defense budgets, arms sales are even more critical to the defense industry in my state to maintain production lines and keep jobs.”

“That would not have been the response a decade ago,” said one staffer who works on the issue. “National security hawks would have been worried about defense items moving to the Commerce list. The environment on the Hill has dramatically changed.”

One concern came from the International Association of Machinists and Aerospace Workers, which believes that easing controls on military technology and software could actually lead to more outsourcing of production.

William Lowell, who spent a decade of his 30 years at the State Department directing defense trade controls, told ProPublica that the move represents a major shift in the U.S. attitude towards international arms trade. U.S. policy has long been aimed at “denying the entry of U.S. military articles of any type into the international gray arms market – for which small arms and military parts are the lifeblood,” Lowell wrote in comments opposing the new rules. “Commercial arms exports have never been considered normal commercial trade.”




A prototype smart grid project holds hope for the future

After having obtained initial success in monitoring the progress made in Puducherry, Power Grid is taking the next bold step to install 87,000 smart energy meters in the city homes

Soon after the power grid collapse in July last year, the then power minister Veerappa Moily was reported to have said that India suffers from aggregate and technical losses (ATC) of 27.15% of the power generated and, if efforts were made to bring this down to even 12% (or less), the power thus saved would be as high as 15,000MW that can meet the dire needs of homes and industries.


A further study on this subject shows that, except for a few states that have a single digit loss of power (ATC), there some losing as much as 70% while north-eastern region records loss at 36.44% and the southern region at 19.49% of the power generated. The tragedy is that all these power losing states are those that are actually suffering for lack of power but apparently are not taking enough precautions to stop this loss.


ATC also covers transmission and distribution loss, which is more likely to be in the form of "stolen" power, resulting in the law abiding citizen having to pay for the same!


Power grid failure is also due to loss making state-owned utility Boards that simply overdraw power rather than contracting for adequate power in a planned manner. Most state utilities are loss making "concerns" which do not pay for the power drawn on time thus compounding the troubles faced by the power generators.


In order to improve the overall situation, the Power Grid Corporation, in collaboration with Puducherry Electricity Department established the first pilot smart grid project by installing more than 1,400 smart energy meters in various homes in Puducherry that would perform various designated functions automatically and feed the resultant information to the central computer. This IT-enabled grid system aims to cut down transmission theft and loss.


There are 14 such smart grid projects under way throughout the country and the experience gained so far from Puducherry has been highly useful. Also known as AMI or advanced metering infrastructure, this project at Puducherry covered possibly the most important element of the smart grid relating to metering.


In so far as loss of power, due to theft is concerned, there are no estimates that can be given simply because this occurs in an "invisible" manner. Most electricians are aware that they can easily hook up connection to direct supply of power from source (the main lines) at the point of contact with impunity. This is the first point of contact to get "free" stolen power that needs to be plugged!


After having obtained initial success in monitoring the progress made in Puducherry, Power Grid is taking the next bold step to install some 87,000 smart energy meters in Puducherry homes. No doubt, when the results are computed from the other 13 centres, appropriate steps can be taken to carry the smart energy meter project to the next national level.


What is of utmost importance is that we ought to ensure that there are strictly encased and pilfer-proof meters that cannot be "picked". Also, any attempt at tampering them should automatically emit signs or alert signals at the central computer that such a nefarious activity is underway, giving location details so that the culprits can be apprehended.


Although hot water is not required in most parts of the country, those who have installed solar water heaters do get a special discounted rate on the electricity consumed. Use of solar power that can reduce the dependence on electric power is unfortunately, out of reach for the common man, because of high investment cost of the panels. The power minister needs to direct some attention to this aspect as well, so that the power saved in this fashion could be better utilised for industrial development.


In the meantime, it is sad to note that nine Electricity Regulatory Commissions, including the Central Electricity Regulatory Commission (CERC) do not have chairpersons to run their shows. It is time the power minister takes efforts to overcome any hurdles that may have caused this lapse, as apparently, without the top brass to run these important organisations, one cannot expect the work to go on smoothly.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Dr Anantha K Ramdas

3 years ago

Right on, Mr Shah!

Power theft is the main reason for loss of revenue for the State Electricity Boards. If these are made into independent profit oriented companies, they will become more vigilant, do better service and ensure that this problem is reduced considerably. It can never be eliminated because of corrupt staff and our motivated unwillingness to employ fool-proof,tamper-resistant meters and connectors at the main supply point, from powerline poles to individual homes!

On the top of this, our own integrity matters most in not overlooking the power stealing by those who know how to!

Parimal Shah

3 years ago

The power theft is a nuisance that goes on with a tcit connivance of electric supply companies - everyone in an area knows about celebrations, Eid, Diwali, Marriages, Ganeshotsav etc etc and the power theft occurs openly - some of the workers in the power company also may be participating in the festivities and with knowledge. I once came across a senior worker of one such company and suggested he checks from where the power is being drawn for a function in a particular area. His answer was that I should give a written complaint. We are so much obsessed with such formalities that we ignore to notice open truth. The attitude was to brush the issue under the carpet rather then find the culprit to prevent such theft. This suits the companies because they need not bother to improve efficiency - they simply request a rate hike - and get it sooner or later. And honest citizens pay! This happens only in India!
Why can we not have vigilance squads to check power-theft during such events?

TCS Q2 net profit jumps over 50% to Rs5,607.75 crore

The Tata group company delivered impressive results, with sales increasing by 38.9% and net profit increasing by 50.2% on firm execution, currency tailwinds and volume increase. TCS shares zoomed to a 52-week high on the BSE before the result announcement

Tata Consultancy Services (TCS), India’s largest information technology company reported a robust net profit of over 50% during the second quarter lead by firm execution, currency tailwinds and volume increase.

For the quarter to end-September, the Tata group company said on a standalone basis, its net profit rose 50.2% to Rs5,607.75 crore from Rs3,733.58 crore while its total revenues, including sales, increased to Rs16,607.7 crore from Rs11,948.7 crore, same period last year.

Rajesh Gopinathan, chief financial officer, TCS said, “Strong volumes, currency tailwinds and firm execution helped us post industry-leading operating margins in this quarter. Our ability to manage operations with a degree of discipline has helped maintain the tempo of investments needed to sustain growth as well as provide superior shareholder returns.”

The positive showing by TCS is a result of strong volumes, currency depreciation and solid execution. Its second quarter volumes grew at 7.3% while operating margins stood at a healthy 30.1%, reflecting robustness and strength even in uncertain market conditions. Growth in Q2 was broad-based with all industries contributing to the good performance, and it was led by life sciences, media, energy and utilities and BFSI verticals. All core markets grew smartly with Europe, North America and UK. According to the company, there was balance growth in other services such as asset leverage solutions, assurance, enterprise solutions, engineering services and infrastructure.

Operating profit for the September 2013 quarter was Rs6,305 crore, a whopping growth of 51.1% over the same period last year.

Commenting on the Q2 performance, TCS managing director and chief executive N Chandrasekaran said, “It has been another great quarter. We have demonstrated all-round strong growth across markets and industries, highlighted by efficient and rigorous execution. Our ongoing investments in industry-led solutions and our efforts to provide insights and articulate the relevance of the digital revolution to business is helping us gain mindshare with customers and differentiate the TCS brand in the market.”

Some of the highlights of the quarter were:

# Chosen by a global financial institution for a multi-year contract to provide assurance services to certify the roll out of their applications globally

# Awarded a multi-million dollar engagement by a large North American pharma company to provide end-to-end managed services for its data centers worldwide.

# A global insurance company based in North America has selected TCS to develop a multi-platform tablet solution for their field agents

# A global bank based in Europe has selected TCS to build a multi-country mobile application for their personal and business clients globally

On Tuesday, TCS ended marginally higher at Rs2218.2 on the BSE, while the 30-share benchmark closed 60 points down at 20,547.6. Before the results announcement, TCS shares hit its 52-week high of Rs2,258.05 during the morning session.

For more information on other company results, check out this link


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