May 6, 2021 – Close links between the defence industry and governments in Europe are jeopardising the integrity and accountability of national security decisions, according to a new report by Transparency International – Defence and Security.
Defence Industry Influence on Policy Agendas: Findings from Germany and Italy explores how defence companies can influence policy through political donations, privileged meetings with officials, funding of policy-focused think tanks and the ‘revolving door’ between the public and private sector.
These ‘pathways’ can be utilised by any business sector, but when combined with the huge financial resources of the arms industry and the veil of secrecy under which much of the sector operates, they can pose a significant challenge to the integrity and accountability of decision-making processes – with potentially far-reaching consequences.
This new study calls on governments to better understand the weaknesses in their systems that can expose them to undue influence from the defence industry, and to address them through stronger regulations, more effective oversight and increased transparency.
Natalie Hogg, Director of Transparency International – Defence and Security, said:
“When individuals, groups or corporations wield disproportionate or unaccountable influence, decisions around strategy and expenditure can be made to benefit private interests rather than the public good. In defence, this can lead to ill-equipped armed forces, the circumvention of arms export controls, and contracts that line the pockets of defence companies at the public’s expense.
“The defence and security sectors are a breeding ground for hidden and informal influence. Huge budgets and close political ties, combined with high levels of secrecy typical of issues deemed to be of national security, means these sectors are particularly vulnerable. Despite the serious risk factors, government oversight systems and regulations tend to be woefully inadequate, allowing undue influence to flourish, with a lot to gain for those with commercial interests.”
Transparency International – Defence and Security calls on states to implement solutions to ensure that their defence institutions are working for the people and not for private gain.
Measures such as establishing mandatory registers of lobbyists, introducing a legislative footprint to facilitate monitoring of policy decisions, strengthening conflict of interest regulations and their enforcement, and ensuring a level of transparency that allows for effective oversight, will be important steps towards curbing the undue influence of industry over financial and policy decisions which impact on the security of the population.
Notes to editors:
Defence Industry Influence on Policy Agendas: Findings from Germany and Italy is based on two previous reports which take an in-depth look at country case studies. The two countries present different concerns:
- In Italy, the government lacks a comprehensive and regularly updated defence strategy, and thus tends to work in an ad hoc fashion rather than systematically. A key weakness is a lack of long-term financial planning for defence programmes and by extension, oversight of the processes of budgeting and procurement.
- In Germany, despite robust systems of defence strategy formation and procurement, significant gaps in capabilities have led to an overreliance on external technical experts, opening the door to private sector influence over key strategic decisions.
The information, analysis and recommendations presented in the case studies were based on extensive document review and more than 50, mainly anonymous, interviews.
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The risks and impacts of inappropriate influence in the policy-making process, in which individuals or organisations try to persuade in favour of, or force their own agenda, are particularly significant in the defence and security sector. In this context, high levels of secrecy and complexity, combined with close relations between government, private experts, and the defence industry, converge to create a potentially fertile ground for private interests to thrive. Yet when individuals, groups or corporations wield disproportionate or unaccountable influence, this undermines the public good and public funds may be squandered.
This situation is further complicated by the different roles a government plays with respect to its defence industry, being simultaneously both the main customer and the main regulator. Because the government is reliant on the national defence industry for the fulfilment of one of its core obligations – providing defence and security for its citizens – it is easy to see how lines in the relationship between the two roles can easily become blurred. If unchecked, the influence of the defence industry can damage the integrity of state institutions and distort the aims of a national security strategy, while undermining market competition and good defence sector governance.
This paper presents the main findings from two case studies on the influence of the defence industry on the defence and security policy agendas of Germany and Italy. The aim of the studies was to identify pathways of potential undue influence and to make proposals for a more ethical relationship between the defence industry and policy-making entities. This paper provides a summary of the main findings from each study and presents a preliminary framework for understanding the factors that drive the exploitation of these pathways of influence.
New report warns weak regulations leave door open to undue influence
October 21 – German defence policy risks being influenced by corporate interests, new research by Transparency International – Defence & Security warns.
Released today, Defence Industry Influence in Germany: Analysing Defence Industry Influence on the German Policy Agenda details how defence companies can use their access to policymakers – secured through practices such as secretive lobbying and engagements of former public officials – to exert considerable influence over security and defence decision making.
The report finds that gaps in regulations and under-enforcement of existing rules combined with an over-reliance by the German government on defence industry expertise allows this influence to remain out of the reach of effective public scrutiny. This provides industry actors with the opportunity to align public defence policy with their own private interests.
To address these shortcomings, new controls, oversight mechanisms need to be put in place and sanctions should be applied to regulate third party influence in favour of the common good and national security.
Natalie Hogg, Director of Transparency International – Defence & Security, said:
“Decisions and policy making related to defence and security are at particularly high risk of undue influence by corporate and private interests due to the high financial stakes, topic complexity and close relations between public officials and defence companies. Failing to strengthen safeguards and sanction those who flout the rules raises the risk that defence decision making and public funds are hijacked in favour of private interests.”
The report shows how lax rules around policymakers declaring conflicts of interest, and lack of adequate penalties for failing to disclose them, leaves the door open to MPs wishing to take up lucrative side-jobs. Frequent and prominent cases of job switches between the public and private defence sector compound issues of conflicts of interest and close personal relationships with inadequate oversight.
And, due to a lack of internal capacity, Germany’s defence institutions are increasingly outsourcing key competencies to industry, allowing defence companies crucial access to defence policy. The procurement of these external advisory services is not subject to appropriate oversight.
While the German constitution requires a strict control over excessive corporate influence in public sectors, too often this is not sufficiently exercised due to a lack of technical and human resources within government and parliament. In addition, insufficiently enforced legal regulations and a lack of transparency of lobbying activities enables undue influence to occur in the shadows outside of public scrutiny.
Greater transparency is necessary to ensure accountability
National security exemptions are common in the defence sector and enable institutions to override transparency obligations in favour of secrecy. However, protecting national security and ensuring the public’s right to information can both be achieved by striking the right balance where information is only classified based on a clear justification for secrecy. Transparency in defence is crucial to ensuring effective scrutiny in identifying and controlling undue influence.
“Despite the justification for secrecy in this policy area the greatest possible transparency must be created to ensure control by parliament and the public. If, in addition, human resources and expertise are lacking, advice from corporate lobbyists receive easy access,” said Peter Conze, security and defence expert at Transparency International Germany.
New lobbying register does not go far enough: we need a legislative footprint
The lack of transparency around lobbying in Germany allows industry actors to exert exceptional influence over public policy.
While Germany’s proposed new lobbying register provides a positive step towards transparency, it does not go far enough to allow effective scrutiny. External influence on legislative processes and important procurement decisions remains unaccountable without the publication of a legislative or decision-making footprint, which details the time, person and subject of a legislator’s contact with a stakeholder and documents external inputs into draft legislation or key procurement decisions.
Transparency International – Defence & Security is calling on the German government to:
- Expand the remit of the proposed lobbying register to cover the federal ministries and industry actors.
- Include requirements for a ‘legislative footprint’ that covers procurement decisions in addition to laws. The legislative footprint should outline the inputs and advice that have contributed to the drafting of laws or key policies, and substantially increase transparency in public sector lobbying.
- Introduce an effective and well-resourced permanent outsourcing review board within the Ministry of Defence to verify the necessity of external services and their appropriate oversight.
- Strengthen the defence expertise and capacity within the independent scientific service of the Bundestag, or to create a dedicated parliamentary body responsible for providing MPs with expertise and analysis on defence issues.
Notes to editors:
- The report “Analysis of the influence of the arms industry on politics in Germany” was prepared by Transparency International – Defence & Security with the support of Transparency International Germany.
- The report examined structures, processes and legal regulations designed to ensure transparency and control based on 30 expert interviews. The report is part of a comprehensive study of the influence of the defence industry on politics in several European countries.
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This report examines systemic vulnerabilities and influence pathways through which the German defence industry may exert inappropriate influence on the national defence and security agenda. Governments and industry should mitigate the risk of undue influence by strengthening the integrity of institutions and policy processes and improving the control and transparency of influence in the defence sector. Compiled by Transparency International Defence and Security with the support of Transparency International Germany, this report forms a case study as part of a broader project to analyse the influence of the arms industry on the defence and security agendas of European countries. Alongside Italy, Germany was selected as a case study due to its defence industry characteristics, industry-state relations, lobbying regulations and defence governance characteristics. The information, analysis and recommendations presented in this report are based on extensive research that has been honed during more than 30 interviews with a broad range of stakeholders and experts.
Transparency Deutschland und Transparency International Defence & Security haben im Rahmen einer gemeinsamen Studie den Umfang möglicher Einflussnahme durch die deutsche Rüstungsindustrie auf die Sicherheits- und Verteidigungspolitik untersucht.
Das Ergebnis: Die Möglichkeit der Einflussnahme durch die Wirtschaft besteht, trotz der im Grundgesetz geforderten strikten Kontrolle von Politik und Beschaffung in diesem Bereich durch Parlament und Regierung. In vielen Fällen wird die Kontrolle aufgrund des Mangels an Ressourcen oder an Fachwissen auf Seiten des Parlaments und der Regierung, wegen unzureichender Durchsetzbarkeit von gesetzlichen Regelungen bei Interessenkonflikten sowie aufgrund schwacher Überwachung und Rechenschaftslegung von politischen Zuwendungen und von Lobbyaktivitäten der Wirtschaft nicht ausgeübt.
Zu diesem Schluss kommt die Studie in Folge der intensiven Betrachtung systemischer Schwachstellen sowie den Auswirkungen dieser auf politische Prozesse. An diese Analyse anschließend beinhaltet die Studie entsprechende Empfehlungen für die Politik, insbesondere für die Stärkung der Integrität von betroffenen Institutionen und Prozessen.