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Mar 16, 2011

Gillard’s about to bomb out where Rudd didn’t

The Australian government is set to pass legislation that woefully fails to ban cluster munitions as has been agreed with the international community, writes Nicholas Taylor.

A cluster bomb is a weapon that has inside multiple — often hundreds — of small explosive sub-munitions or bomblets that are dispersed over an area the size of several football fields. As a result, the final location of each bomblet is impossible to control for those deploying them, and so whom they maim or kill is  unknown and indiscriminate. Some bomblets are even designed to look like soft drink cans, hockey pucks or tennis balls.

Simply put, the victim of a cluster munition could equally be a soldier, an innocent woman or a small child — later that day, in a week, or 10 years. In Laos they are still killing people more than 35 years after they were dropped. In fact, research estimates that as many as 98% of the victims of unexploded cluster munitions are civilians, a third of which are children.

The Rudd government was among the small number of norm entrepreneurs that signed the Cluster Munitions Convention in December 2008. Repeated statements by the government since have conceded that the use of cluster munitions presents the risk of “unacceptable harm to civilians” and must therefore be subject to an internationally binding ban.

When the convention came into effect in August last year, the Gillard government was part of a chorus of NGOs and governments that saw “an end for all time” of the use of cluster munitions by prohibiting their production, use, stockpiling and transfer. It is widely believed that article 1c of the convention further prohibits investment in companies that either develop or produce cluster munitions by also prohibiting signatories from any activity that may “assist and encourage” any other countries to do so.

However, for the convention to be binding, the signing of a treaty is not enough. In addition it must be ratified, which is achieved by introducing legislation that makes it a criminal offence under Australia law to act in anyway contrary to the international convention.

On March 24, the Senate Committee on Foreign Affairs, Defence and Trade will table its report to the Australian Senate on the proposed Cluster Munitions Prohibition Bill, some provisions of which violently differ from the commitments made by the Australian government to the international community when it signed the convention in 2008.

In particular, there are two related loopholes in the bill. If the Senate committee does not highlight these deficiencies in its report and recommend amendments to close the loopholes, the bill could be allowed to pass within weeks.

First, the bill undermines that part of the convention that requires Australia to never under any circumstances act contrary to the convention by adding phrases that explicitly allow those of our military allies that are not party to the convention unfettered access to stockpile, retain and transit cluster munitions within Australia.

No other signatory country in the world has expressly permitted such unfettered free access to its territories as this. It is unprecedented. The legislation further allows Australian military personnel to actively assist in cluster munitions-related activities during joint military operations with our non-signatory allies to the extent where, according to Human Rights Watch, Australian troops would be permitted to develop strategies, direct attacks, and assist in the deployment of cluster bombs — basically, to operate to the point where they can do anything bar pull the trigger.

Second, the legislation does not explicitly prohibit investment in companies that produce cluster munitions. Indeed the respective governments of New Zealand, Ireland, Luxembourg and Belgium have in their domestic legislation included statements specifically banning investment and provision of other financial services — such as banking, loans and equity — to companies that either develop or produce cluster munitions. Other governments, including Lebanon, Mexico, Norway and Rwanda, have all publicly stated that they interpret the convention as including a prohibition of direct and indirect investment. So the bill that is currently in front of the Australian parliament is clearly out of line with international standards and expectations.

Indications are that the investment community in Australia also wants this issue addressed with more adequate legislation.

For instance, the Australian Council of Super Investors (ACSI) — a body that represents more than $300 billion of domestic retirement savings — has been especially vocal in its opposition to the proposed bill. In its latest submission to the Senate Foreign Affairs, Defence and Trade Committee dated March 8, ACSI states that “the current drafting will have no practical effect on the financing of cluster bomb production”. In an earlier submission, ACSI called for amendment to “prohibit the direct and indirect financing of companies involved in the production of cluster munitions” in order to ensure the Australian legislation does not “go against the spirit of the [convention]”.

In its 2009 report recommending that the Australian government ratify the convention, the Parliamentary Joint Standing Committee on Treaties recommended that any bill prevent ”investment by Australian entities in the development or production of cluster munitions, either directly, or through the provision of funds to companies that may develop or produce cluster munitions”.

And yet, in research I published as recently as November last year, I explained how the $32 billion Australia Super and $10 billion Health Super pension funds as well as the $71 billion Australian Government Future Fund are likely to have — in the absence of publicly available ethical principles excluding such investments — investments in companies that produce cluster munitions despite the international convention seeking to prohibit such activity from August 2010. A review of these funds annual reports and websites this week does little to change the conclusions I first aired in 2009.

The call for tighter legislation banning investment in cluster munitions overseas has also been trumpeted by NGOs and civil servants. For instance, last week Matthew Zagor, of the Australian Lawyers for Human Rights and senior lecturer at the Australian National University, made the compelling argument that the current “legislative drafting … weakens the criminal nature of the offence by exempting those who act negligently”.

Advice from the Attorney-General’s department on the bill has pointed out that it presently “does not include an investment offence” in its provisions adequate enough to prohibit investment in companies involved in the production of cluster munitions if that financing was not provided for the express purposes of developing or producing cluster munitions. The issue is that of the seven companies known to be involved in such business, none do so exclusively — they make other civilian and/or military products.

So why hasn’t the Australian government been listening?

There are those who argue that the exclusion of the seven companies would limit the investment returns available to members. This widely held logic applies to all sorts of companies, regardless of the reason for limiting the number of stocks available to invest in. However, I am unaware of any investor specifically arguing for the bill to permit Australian entities to continue investing in companies involved in the production of cluster munitions overseas. The argument that is made is done so to adhere to financial theory, not to satisfy any emerging or established norm of behaviour.

The legislation in front of parliament therefore must be amended to dictate for investors what they can and can’t invest in. Arguably the extent to which the international convention is successful rests on it. For with $1.4 trillion locked away in retirement savings and in government funds, Australia has the fourth largest investment market in the world. We can’t stop companies overseas developing and producing cluster munitions, but we can stop this vast pool of Australian retirement savings investing in them.

Questions must also be asked as to why this legislation is worded in such a way as to permit ongoing investment in cluster munitions producers. As professor Steven Freeland of the University of Western Sydney rightfully argued in 2009, ordinary Australians must “regularly remind our political leaders we are interested in the fate of victims of conflict and we support Australia’s unflinching involvement in international debates on human rights”. To permit our military allies, and our substantial investment industry, to continue acting in a manner that directly undermines the whole intention of the convention is abhorrent.

The members of the Australian Parliament now have before them a historic opportunity to further strengthen international efforts to help eradicate an especially inhumane and ineffective tool of modern warfare, as well as to fulfil commitments made under the Rudd government in 2008.

Should the legislation be passed without amendment in the coming weeks, Gillard and her team will have ensured it will be ordinary working Australians who will unwillingly, and probably unknowingly, have blood on their hands.

N.A.J. Taylor is a PhD candidate in international relations at the University of Queensland, casual lecturer at La Trobe University’s Graduate School of Management, and principal of Taylor McKellar, an international political risk consultancy.

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11 thoughts on “Gillard’s about to bomb out where Rudd didn’t

  1. chris doonan

    I am very angry about this, maybe the people responsible for this should have their children and grandchildren be exposed daily to cluster bombs then they might see sense.