How arms have become a truly global business

Few businesses have globalised as successfully as the arms trade, with a network of international dealers fuelling dozens of conflicts across the world, according to a new report.

Most of the world's weapons are produced in developed countries and sold to the Third World, soaking up meagre funds badly needed for building infrastructure. The few laws that exist to check this trade are easily circumvented through the elaborate and sophisticated exploitation of every loophole, says the study.

While Western governments consider risking lives of troops on peace-keeping operations in places such as Darfur and Liberia, businessmen based in the West are supplying arms to the conflicts through a highly lucrative "grey market".

The report, by the human rights groups Amnesty International and TransArms, calls for drastic changes in the law to regulate an "arms trade which is out of control and costing hundreds of thousands of lives every year".

The role of private contractors has become increasingly important in this rampant free market, particularly in the 35 countries whose exports make up 90 per cent of the arms trade.

What laws do exist are primarily intended to protect the West, and the US in particular, from the threat of terrorism, rather than to prevent human rights abuses elsewhere, the report said, adding that the few cases where the activities of private weapons dealers are exposed by laws or inquiries merely scratched at the surface of the clandestine trade.

The study highlights some instances where British firms have been involved in supplying weapons to the third world.

A British company supplied ships to ferry hundreds of thousands of rounds of explosives and ammunition from Brazil to Saudi Arabia, which were seized en route by South African police. The charge was that the transport of the ammunition, produced by a Brazilian company, Companhia de Cartuchos, had not been cleared with the South African authorities which, unlike Brazil, has a law prohibiting such supplies to countries like Saudi Arabia, where it could be used for human rights violations.

The British company was fined a paltry £2,000 by a South African court, when the maximum sentence for the offence was 15 years' imprisonment. The court also ordered the disposal of the cargo.

The report also claimed that weapons from the Balkans were "shipped, clandestinely and without public oversight" to Iraq by a chain of private brokers from Britain, as well as from the US, Israel, Switzerland, Bulgaria, Croatia, Moldova and Ukraine, "under the auspices of the US Department of Defence".

It is not known whether the shipment ever actually reached Iraq, said Amnesty, but if it did, it could well have been used in human rights violations and abuse.

The US government and its allies are also said to have used a private Danish shipping company to conceal a build-up of arms for the Iraq invasion, while there was still the public pretension that George Bush, the US President, and Tony Blair, the British Prime Minister, wanted a diplomatic solution, the report says.

Air freight operators are playing an increasingly prominent part in the lucrative weapons trade while taking part in other business including the transport of aid, Amnesty said.

Protesters against the unregulated arms trade yesterday lobbied MPs in London. Kate Allen, the UK director of Amnesty International, said: "Arms brokers and transporters have helped deliver the weapons used to kill and rape civilians in Sudan and the Democratic Republic of Congo. We need an arms trade treaty to bring the whole industry under control."