Liam Fox defends Mideast arms sales

Britain should seek to retain a "healthy slice" of the defence market in the Middle East, Defence Secretary Liam Fox said today.

David Cameron has faced criticism for including defence industry representatives in the trade delegation on his tour of the region, amid concerns that British-made equipment could be used to suppress the current wave of popular unrest.

The Foreign Office has already revoked a series of export licences for Libya and Bahrain in the wake of the government crackdowns on protesters in those countries.

Speaking at the Civitas think tank in London, Dr Fox said that such issues should be dealt with on a "case-by-case" basis, depending on how events developed in the countries concerned.

"We have to recognise that countries have a right of self-defence and not all of them have a defence industry so they will always buy externally," he said.

"I want to make sure the United Kingdom - within the limits that we set ourselves ethically on defence exports - is getting a healthy slice of that.

"There are a great deal of unknowns still out there and we will have to look at things on a case-by-case basis."

Dr Fox also emphasised the importance of the assistance of countries in the Gulf region in getting supplies through to British forces fighting in Afghanistan.

"We need to remember that we - with a very long supply line - need partners to ensure success in Afghanistan," he said.

"We have depended a great deal on our partners in the Gulf and elsewhere in ensuring that we are able to supply and re-supply our armed forces. We need to take that into account in the wider relationships."

The Defence Secretary also played down the prospects of Nato military intervention in Libya, in the wake of Colonel Muammar Gaddafi's brutal attempts to put down the protests.

While he said that there was a "range of contingencies" that was being looked at, it was was important to recognise the "limitations of our power".

"We have to have a bit of a re-set here with reality and how much influence we can actually have. we can make our views known and we can send signals," he said.

Dr Fox also warned that the armed forces faced further cuts as the Government worked through the plans set out in the strategic defence and security review over the coming years.

"We will face difficult financial choices, I don't in any way shy away from that," he said.

"There is no painless way to cut public spending. The deficit itself is a national security liability and we have to deal with the deficit.

"I would love to perform surgery with an anaesthetic but on this occasion it is just not an option available to me.

"This is a bullet that has to be bitten."

He said he was determined to bring the "mushrooming" equipment costs - which he had inherited from the previous Labour government - under control with the imposition of "real budgetary discipline" in the Ministry of Defence.

If major programmes run over budget or behind schedule, he said that the personnel concerned would be summoned before a new review board - which he will chair - to be held to account.

In addition, the review board will publish quarterly lists of "projects of concern" in order to put pressure on the shareholders of the firms involved to take action.

"Where projects are falling behind schedule or budget we must take immediate remedial measures," he said.

"I want shareholders to see where projects are under-performing so that they can bring market discipline to substandard management where required."