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Ending Investment in Cluster Munition Producers

A Joint Statement by Handicap International, Human Rights Watch, and Netwerk Vlaanderen

Cluster munitions stand out as the weapon category most in need of stronger national and international regulation in order to protect civilians during and following armed conflict. Cluster munitions have been used in at least twenty countries and while this number is still relatively limited, the harm to the civilian population is striking in nearly every case. Cluster munitions pose an immediate danger to civilians during attacks, especially in populated areas, because they are inaccurate and have a wide dispersal pattern. They also endanger civilians long after the conflict due to the high number of submunition duds that do not explode on impact and become de facto landmines.

At least seventy countries stockpile cluster munitions and the aggregate number of submunitions in these stockpiles is staggering - well into the billions. The dangers of continued unrestrained production, trade and use of cluster munitions demand urgent action to bring the humanitarian threat under control. A first step in this process is to stigmatize the countries and companies that produce and market cluster munitions.  
The success of banning antipersonnel mines has strong roots in the actions of countries and NGOs in working together at the national level. Belgium was a leader in this effort, being the first country globally to ban on antipersonnel mines in 1995. Today, legislation is before its Parliament that would prohibit the direct and indirect investment in producers of antipersonnel mines. This model of action can serve as a concrete model for curtailing the unregulated production and proliferation of cluster munitions.  
Countries and Companies that Produce Cluster Munitions  
According to Human Rights Watch, globally, thirty-four countries are known to have produced over 210 different types of cluster munitions. These include artillery projectiles, aerially delivered bombs, and rockets or missiles that can be delivered by surface or aerial means. The countries that produce cluster munitions are: Argentina, Belgium, Brazil, Bulgaria, Canada, Chile, China, Egypt, France, Germany, Greece, India, Iran, Iraq, Israel, Italy, Japan, North Korea, South Korea, Netherlands, Pakistan, Poland, Romania, Russia, Serbia & Montenegro, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.  
Human Rights Watch has reported that over eighty-five companies have produced cluster munitions or their key components. Of these companies, fifty-nine are actively producing or marketing cluster munitions or submunitions. Nearly half of these active companies are based in Europe and another eight are located in the United States. Major well-known arms producing companies are among the producers of cluster munitions: BAE Systems, DaimlerChrysler Aerospace, European Aeronautic Defence and Space (EADS), Israel Military Industries, General Dynamics, Giat Industries, Lockheed Martin, Saab Bofors, and Thomson Dasa Armements. However, production is not limited to Europe and North America. For example, companies in Brazil, Chile, China, Egypt, Singapore, and South Africa also currently manufacture and market cluster munitions.  
In Belgium, the Forges de Zeebrugge (Herstal) currently produces several types of aerial rockets that are cluster munitions. Although it is unclear whether production activities are on-going, MECAR SA (Petit-Roeulx-lez-Nivelles) at one point marketed a mortar bomb containing submunitions.  
Identifying Investment in Cluster Munitions Producers by Belgian Banks  
In April 2004, the Netwerk Vlaanderen and its partners released a report revealing that the five largest banks in Belgium (AXA, DEXIA, FORTIS, ING and KBC) have a combined investment of $1.5 billion in eleven international weapon producing companies, including producers of cluster munitions. Since the release of the report and campaigning activities, there has been significant movement on this topic in the Belgian bank sector.  
ING, the largest private financial institution in the Benelux countries, and the 11th largest in the world, decided at the end of March 2005 to implement strict criteria for defense-oriented companies involved in the production, maintenance, or sale of cluster munitions. ING will no longer finance these companies, and will no longer make its own direct investments in these companies. Indirect investments are still permitted however.  
ING is the second bank group to take a clear standpoint on this issue, after KBC. KBC will no longer give credits to cluster munition producers and will no longer buy shares in these producers. What's more, the investment funds which KBC is offering to their clients will also no longer contain shares in these producers. KBC argues that it will no longer invest in these specific weapon systems because the use of these weapons caused disproportionate civilian suffering in times of war and conflict during the last 50 years.  
Best Practice: The Case of the Norwegian Government Petroleum Fund  
The Norwegian Government Petroleum Fund is a mixed fund established in 1990, in which all oil income from the Norwegian state is placed. The fund invests 40 percent of this in equity shares and 60 percent in bonds. In 2002 the Government appointed a commission with a mandate to propose ethical guidelines for the fund.  
The Revised National Budget of 2004 included new ethical guidelines proposed by the Government for the management of the Government Petroleum Fund. The fund now employs negative screening to exclude companies that produce weapons whose normal use violates fundamental humanitarian principles, including antipersonnel mines and cluster bombs. In March 2002 the fund disinvested from the company Singapore Technologies Engineering, which produces antipersonnel mines, because such an investment implied a violation of the prohibition against assistance in article 1 of the 1997 Antipersonnel Mine Ban Convention.  

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