About Proliferation
About Proliferation
What Business Needs to Know:
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That countering the proliferation of Weapons of Mass Destruction is a top objective of most governments;
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That Weapons of Mass Destruction (WMD) include nuclear, chemical, biological, and missile systems;
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That exports of dual-use and ancillary equipment even with an indirect utility to the lifecycle of a WMD can be refused an export licence;
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That a number of countries work to buy goods illicitly;
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That involvement in proliferation is bad for business, and carries reputational, legal, financial risks
What is Proliferation?
Proliferation in the context of the project is the spread of Weapons of Mass Destruction (WMD) and military capabilities. Proliferation tends to fall into two main categories:
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Horizontal proliferation refers to countries acquiring a new capability that they did not previously possess;
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Vertical proliferation involves the quantitative and/or qualitative improvement of a country’s existing capability.
What are Weapons of Mass Destruction?
‘Weapons of Mass Destruction’ is a term that has become increasingly popular and politicised in recent years. The term is generally used to cover the following types of unconventional weapons:
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Nuclear weapons
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Chemical weapons
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Biological weapons
Also covered are the means of delivery which include:
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Primarily ballistic missiles
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Also other means which are more of use in conventional arsenals: aircraft, cruise missiles, UAVs
In Practical Terms, how do WMD Relate to Business?
In most cases, WMD are not available to purchase off the shelf, they need to be developed through large-scale research, engineering and manufacturing ventures.
Practically then, WMD programmes rely on the dual use equipment and support services for WMD research and development, and manufacture. Without taking the relevant antiproliferation measures, businesses that produce dual use and other relevant goods are vulnerable to being targeted by proliferators and involved in illicit trade.
What is Illicit Trade?
Illicit trade occurs when states or other entities use deceptive and fraudulent methods to circumvent export controls and sanctions to obtain the goods and services that they need to sustain their WMD efforts.
Involvement in Illicit Trade is Bad for Business
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Reputational risk: Being publicly linked to proliferation activities carries huge reputational risks. Being publicly named attracts a negative reputation which is difficult to dispel, and people may still be referring to the case many years later.
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Financial risk: Involvement in proliferation, knowingly or unknowingly, carries significant financial risk. Companies can be fined thousands or even millions for being found to be non-compliant. There are also the financial implications of the related reputational damage. Being publicly named in the press may cause customers to seek out new business partners.
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Personal risk: Involvement in proliferation can carry significant legal risks. Those legally responsible within a company, usually the compliance director or other senior management, can be handed a lengthy jail term.
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The risk of being blacklisted: Companies and individuals found to be involved in assisting proliferation are frequently blacklisted by other states, most notably the US. If your business with the US is significant, or the company has US operations, this can significantly impact upon profits and the business’s future viability.
Why do Governments Care about Proliferation?
Most governments view countering proliferation as an important objective. There are many reasons that governments care about illicit trade and view the proliferation of WMD as an undesirable outcome. A few are listed below:
Negative Strategic Implications
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The likelihood of use increases: The more states that possess nuclear weapons, the higher the likelihood that they will be used, either purposefully, or by accident.
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The perceived value of WMD increases: In short, proliferation will lead to further proliferation: the perceived value of the WMD in question will increase as other states see the need to acquire nuclear weapons to balance those of their neighbours.
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Deterrence is not necessarily stable: Deterrence is often cited as the reason that the Cold War stayed peaceful. However, deterrence does not necessarily work in all relationships. In fact, there were many close misses during the Cold War, and luck certainly played some role.
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In fact, WMD are destabilising: Often countries acquiring nuclear weapons for the first time do not have the same infrastructure in place as the existing nuclear weapons states. Their capabilities may not be adequately protected, which may make the nuclear state more inclined to use the weapons for fear of losing them. There may be safety or security concerns surrounding the facilities and work of states seeking WMD. There may be concerns about accidents or terrorists gaining access to weapons.
More Broadly, Why Should Business Care?
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The impact of use on trade: The use of WMD, accidental or intentional by a state, would seriously disrupt trade, especially that occurring across borders.
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The impact of transfer to terrorists: The transfer of WMD to terrorist groups would have significant implications for trade, even if use did not occur. The resultant actions taken would likely restrict the ability of businesses to conduct their affairs.
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The impact of accident: An accident resulting from a state’s WMD activities would also negatively impact upon business, in a similar way that nuclear accidents such as Fukushima have done in Japan.