An EUM Bellwether? India/US Arms Deals Face Crunch Over ConditionsNov 09, 2010 16:16 UTC by Defense Industry Daily staff
Obama’s visit leaves key issues unresolved; C-130J deletions. (Nov 8/10)
When countries export weapons, they frequently set associated conditions. Rules against reselling the gear without permission would be a basic condition for obvious reasons, and more advanced restrictions on technology transfer, sharing of details about the weapon with other countries, and related codicils are also common. Some western countries will also place restrictions on what the purchaser can do with the weapons as part of these “End Use Monitoring” (EUM) agreements. Britain recently forbade Indonesia from using its Scorpion light tanks against a separatist insurgency in Aceh, which caused Indonesia to turn toward Russia as a future supplier. In Africa, Chad encountered trouble from Switzerland after its Pilatus-7 turboprops were reportedly armed for use against a Sudanese-backed guerrilla army. A problem that Sudanese forces and their allies don’t seem to have with Sudan’s new Chinese and Russian jets.
During the Cold War, regimes always had the option of playing Western suppliers off against the Soviet Union. With the USSR’s collapse, that option disappeared for a while. In the early 21st century, the re-emergence of Russia’s weapons industry, and the development of competitive arms industries in countries like China, South Korea, Brazil, and India, is changing the global equation again. EUMs are likely to be affected by this trend, as the leverage to apply them declines. The question is which items are deal-breakers that must be retained by western countries, and which will be allowed to quietly fall by the wayside. That decision will be different in different countries, of course. Meanwhile, the strains created in India by standard American EUMs are an early indicator…
India is a leading edge case for a number of reasons:
- Western military export sanctions, imposed after India developed nuclear weapons, exacerbated existing thinking within India that aimed at 100% self-sufficiency in weapons projects. While that concept still has strong constituencies within India, it has been a conspicuous failure at fielding capable equipment in a timely fashion, especially when compared to rival Chinese and Pakistani efforts. These failures, and the contrasting success of flagship foreign partnerships like the PJ-10 BrahMos supersonic cruise missile, are driving a shift toward more foreign participation, and more private local industry, in India’s state-controlled arms industries.
- Rather than reverting to its previous state of effective dependence on the USSR, however, India is consciously moving to source its military equipment in a multi-polar fashion.
- Its growth, and the growth of its security needs and interests, has made it one of the globe’s largest and most coveted arms export markets; and
- The country has historically been seen as a leader within the so-called global “non-aligned movement” of 3rd and 4th World countries.
France and Israel have both played long-standing roles in India as defense suppliers. The most dramatic sign of India’s multi-polar orientation, however, has been the opening of India’s market to American firms. An early pair of $1+ billion deals for 6-12 new MC-130J Hercules special forces aircraft and 8-16 new P-8i sea/ land surveillance and control aircraft have led that trend.
More may follow. If, and only if, India’s issues with American EUMs can be worked out.
A Defense News article describes many of the issues, and quotes Jeffrey Kohler, Boeing Integrated Defense Systems’ vice president of international strategy. Kohler is also a former head of the USA’s Defense Security Cooperation Agency (DSCA), which handles American weapons exports and conditions.
“The End Use Monitoring (EUM) provision “has been an issue all along,” Kohler said. “We’ve sort of pushed it down the road while the two governments work on it. But we’re reaching a very critical point now. Lockheed is reaching a critical point on the C-130. We [Boeing] now have a major contract that, obviously, we would like to see this issue resolved.” If no agreement is reached this year on EUM language, Kohler said, “There will be a serious blow to the relationship and, obviously, it would make it virtually impossible for U.S. defense companies to work with the Indians.” “
India’s non-negotiable items appear to revolve around insistence that India will not be told how and where to operate the equipment it buys for its own military, and that it is not prepared to submit to annual inspections of its military equipment by US officials. The latter was finessed in order to allow Boeing Business Jets to sell India 3 VIP aircraft; the provision remained, on the tacit understanding that the USA would not do so unless security concerns arose.
That kind of finessing will be more difficult for purely military aircraft, since its practical value is zero. If relations were to deteriorate to the point where inspections are requested, India would always have the option of simply refusing the “new” request.
That is exactly what India did when it transferred some of its British-built BN-2 Britten-Norman Islander light surveillance aircraft to the junta in Myanmar, which is on international human right blacklists. Official British objections and warnings were simply brushed aside.
The problem is that American laws and interests are likely to make re-transfer restrictions a non-negotiable item.
Other provisions in standard American EUMs include the USA’s Communications and Information Security Memorandum of Agreement (CISMOA) that governs how, when, and by whom sensitive information can be shared with India, and even within India. Those kinds of arrangements exist with all US allies as a matter of course. CISMOA provisions can be expected to have very little negotiating room, as they are needed to maintain the security of sensitive technologies. They even affect the ability to share information within America’s own defense firms, a state of affairs that their lobbyists have not been able to change.
A Logistics Supply Agreement (LSA) reportedly includes access and cross-servicing provisions, whereby Indian and American militaries provide logistic support, berthing and refueling facilities for each other’s warships and aircraft on a barter or equal-value exchange basis. That kind of agreement currently exists with 60 other countries, but India’s addition to that list is a political issue there. This is likely to be a flexible negotiating point for both sides, though it is a higher priority for the USA than it is for India.
India’s logistics concerns are more prosaic: guaranteed access to the spares and technical assistance they need, which has been cut off in the past. A US Department of State bureaucrat’s recent freeze on GE’s engine turbine work for India’s already-delayed Shivalik Class frigates, while the department conducts some sort of bureaucratic review, has greatly sharpened those concerns in India.
The P-8i deal is not the first sale of American equipment that has run into these concerns; only the latest. Conflicting accounts surround the recent Foreign Military Sale of MC-130J Hercules special forces tactical transports. Some Indian sources claim that the signing of EUM provisions has been delayed, while US DSCA spokesman Charles Taylor says that unspecified EUM provisions were included. It is possible for both sides to be correct, with some EUM provisions agreed, and others delayed.
Boeing’s P-8i is being handled as a Direct Commercial Sale instead, which is still regulated by the US State Department. Unlike Foreign Military Sales, however, EUM agreements that comply with American laws aren’t required until delivery, which is expected to take place in 2013.
Defense News quotes Lockheed Martin Global’s South Asian president Rick Kirkland, who believes that an umbrella agreement covering US-India trade in general, and addressing defense industry cooperation in particular, may be the solution. India has already implemented a framework of this type with Russia, via the “Indo-Russian Inter-Governmental Commission for Military-Technical Cooperation,” and is hammering out a similar approach with France.
Without that kind of approach, or progress on individual EUM negotiations, further defense sales involving top-of-the-line equipment like E-2D Hawkeye AWACS aircraft, Patriot missiles, or the most advanced F-16 and F/A-18 jets would face extreme obstacles.
Broadly speaking, there are three potential outcomes, and internal politics in both countries will play a role:
(1) India ends up simply refusing to accept EUM provisions required under American law, and those laws are not changed, leading to disqualification or non-selection of American equipment, in favor of comparable alternatives. That decision could have strong impacts on Israel’s defense relationship with India, as Israel is now subject to a de facto US veto for arms exports. The decision would also have wider global ripples, and would be seen as an example by many governments around the world.
(2) The USA could modify its weapons export laws to accommodate some of India’s objections, and existing global realities. That, too, would be seen as a bellwether by many governments around the world. Its impact would be more limited, because many countries do not have the same level of strategic leverage with American or European governments. The biggest impact would be seen among emerging mid-tier arms exporters with accountable governments, like Brazil and South Korea, who would be likely to water down their own arms export controls.
(3) An umbrella agreement could be worked out that finesses some EUM provisions, while featuring reluctant acceptance of others by India. This would represent a partial climb-down by India, in exchange for a developing strategic relationship with America, a wider set of options for arms supply, and access to some of America’s most sophisticated equipment.
Nov 9/10: India’s Times Now TV reports that American EUM demands remain a point of friction, and discusses excerpts from the proposed agreements. Note that these are paraphrases by the TV station:
“Article 5 of inter-operability agreement says that it will be the Indian defence ministry that shall bear the cost of reconfiguring the communications systems. More interestingly – India can only buy from the US Department of Defence. The other clause is in Article 6 of the agreement which says that the US Department of Defence shall provide defence support – subject to approval – which means – whenever it wants. Article 7 of this top secret agreement points to an effective takeover of our defence communications – since the clause says that it will be American officials who would be training Indian Govt personnel and also conducting inspections of the equipment given to India. Then clause number four – which is in Article 9 of the agreement – that says it will be only US army personnel who will have the right to access and inspect the equipment and material given to India.
Article 8, then goes on to say – that the Government of India cannot use its own equipment – without the prior consent of the American Government. So without a nod from Capitol Hill – India can’t touch its own equipment. And the sixth binding cause – which no American equipment provided to India, will be subject to any cooperative development – meaning that India cannot develop further on US prototypes. These are six of the most relevant clauses in this top secret document – that show how America wants to deal with the India- on their terms – wanting to control Indian defence communications. And they have lobbied hard in order to get India to agree but still not been able to convince the defence establishment.”
Oct 15/10: Shiv Aroor of Livefist says:
“I asked Indian Air Force chief Air Chief Marshal PV Naik today about his position on the uncertainty over whether or when India will sign the contentious Communciations Interoperability & Security Memorandum of Agreement (CISMOA) with the United States. He had a crisp, short reply: “The government asked us for our opinion on the matter. We have informed the government that [not signing the CISMOA] will not make a substantial difference as far as our operational capability is concerned.”
Oct 14/10: Ongoing EUM disagreements have now come into play regarding India’s negotiations to buy up to 10 American C-17 aircraft:
“Senior defence ministry sources told Business Standard that Defence Minister A K Antony, during his visit to Washington last month, bluntly told US Defence Secretary Robert Gates that India would not sign the… (CISMOA) and basic exchange and cooperation agreement for geo-spatial cooperation (BECA). In addition, Antony also conveyed India’s unwillingness to sign a logistics support agreement… “The US is keen to operate with us,” explained a senior IAF air marshall. “We see no benefits in being interoperable with them. So, why should we be hustled into signing these agreements?”
Oct 6/10: Indian defense journalist Shiv Aroor lists the technologies that he says will not be in India’s C-130J-30 special forces aircraft, as a result of India’s refusal to sign the USA’s CISMOA End-User Monitoring agreement: AN/ARC-222 SINCGARS radios, KV-119 IFF Digital Transponder (Mode 4 Crypto Applique), TACTERM / ANDVT Secure Voice (HF) Terminal, VINSON KY-58 Secure Voice (UHF/VHF) Module, and no SINCGARS/crypto features in the embedded AN/ARC-210v SATCOM Transceiver.
“P-8Is are being customised to Indian naval requirements, with communication, electronic warfare and other systems being sourced from India. For instance, defence PSU Bharat Electronics is delivering Data Link-II, a communication system to enable rapid exchange of information among Indian warships, submarines aircraft and shore establishments, for the P-8Is to Boeing. There is, however, the question of India having not yet inked the Communication Interoperability and Security Memorandum Agreement (CISMOA) being pushed by the US as ”a sensitive technology-enabler” for P-8I and other arms procurements.”
July 24/09: As India’s government comes under attack in Parliament for signing the EUM deal, and for its lack of disclosure regarding the deal’s terms, details begin to emerge. One important characteristic is that this is not an overarching agreement to be signed, but an agreed standard text that will be inserted into all future US-Indian defense deals. That text is reportedly frozen, absent agreement by both parties.
One line of attack claims clauses that prevent India from modifying the equipment without American permission, and restricts India from having US equipment serviced by any other country (again, presumably, without American permission). Opposition parties see these clauses as creating unnecessary dependence, and contrast the modification restrictions in particular with the Russian approach. There are also reports that the US can request inspections of equipment with only partial American content. That could give the USA back-door access to a number of items sold by India’s key defense supplier Israel, but questions remain. If the EUMA is simply standard text appended to future agreements, it won’t apply to past Israeli contracts, and may or may not be forced into future ones.
Government officials counter that the most contentious issue, on-site inspections, was resolved in India’s favor. Instead of allowing on-site inspections at any time, American inspectors wishing to check the equipment will need to inform India, which will in turn set up a place and time for the checks at a “non-sensitive zone” and a time of their choosing. Calcutta Telegraph | Chandigarh Tribune | Deccan Herald | Economic Times of India | The Hindu | Indian Express.
July 20/09: Media sources report that the US and India have signed an overarching EUM agreement, during Secretary of State Clinton’s visit to India. The precise terms of that agreement are not discussed.
India and the U.S. also finalized an agreement that would allow American parts to be launched on civilian or noncommercial Indian spacecraft. US Dept. of State release | Wall St. Journal | Deccan Chronicle | Indian Express | Times of India.
May 25/09: The Hindu reports that India’s Ministry of Defence is preparing an umbrella agreement that would cover EUM issues for all American weapons purchases.
“…is on the verge of finalising a common End User Verification Agreement… Just a day before results of the 15th Lok Sabha [DID: India's Parliamentary elections] were declared, two officials of the Ministry traveled to Washington to discuss the draft agreement, sources in the Ministry told The Hindu. The officials came back with a document that is to be placed on the Minister’s desk for discussion.
…Aware that the issue of foreign inspectors on Indian sites is sensitive and evokes strong reaction, especially the Left parties, the Ministry is keen to ensure that the requirement under U.S. laws is kept to the bare minimum.”
The report adds an interesting bit of background regarding the 3 Boeing VIP jets. The military export issue involved the aircraft’s missile countermeasures systems. In order to avoid problematic inspections of an aircraft used by high-level government leaders, with the obvious attendant issues around foreign snooping, India agreed to remove the missile countermeasures equipment if requested, and have them inspected in New Delhi.
- US Department of State – US Defense Trade Security Initiative. Procedures for managing these sorts of licensing issues are modified, in response to complaints from allies. “On May 24, 2000, at a NATO ministerial meeting, the Secretary of State announced a set of seventeen measures known collectively as the Defense Trade Security Initiative (DTSI). The initiatives originally applied only to NATO countries and non-NATO major allies, but were expanded in June 2001 to include Sweden.”
- Livefist (Nov 8/10) – Excerpts From Washington’s Contentious CISMOA Draft For India
- Livefist (Oct 6/10) – EXCLUSIVE: No CISMOA? Here’s What They’re Pulling From The Indian C-130J
- Rediff News (July 22/09) – What is the End-Use Monitoring Agreement? Good backgrounder.
- Calcutta Telegraph (July 22/09) – US defence deal: the inside story
- India’s Business Standard (March 24/09) – Arms supply: India wants acceptable end-use clause from US
- The Times of India (March 17/09) – US freezes engine supply, Navy in a fix. Also details ongoing issues and controversies around EUM, CISMOA, LSA, etc.
- DID (March 3/09) – US State Dept. Throws A Wrench Into Exports, Allied Shipbuilding
- DID (Dec 12/05) – UK Warns USA Over ITAR Arms Restrictions. ITAR is the USA’s set of laws surrounding weapons exports. The warning came in the context of the international F-35 fighter program, where Britain is a fellow “Tier 1″ partner and investor alongside the USA.