UK restarts arms sales to Argentina

Britain is supplying spare parts for Rolls-Royce engines in Argentine warships. But Parliament has not been told the rules banning the supply of military hardware to the Argentine forces, which were introduced after the Falklands war, have changed or been reinterpreted.

The news that Britain has been quietly resupplying the Argentine Navy with official consent since last Spring will be highly embarrassing for the British government, which insists the embargo is unchanged, and is likely to outrage the Falkland Islanders and those who lost family or friends in the conflict in 1982.

The decision to recommence the supply of parts for the Tyne engines coincided with the start of informal talks with Argentina to secure its cooperation on the exploitation of oil fields around the Falkland Islands. But in October last year the Government reiterated that "military equipment falls under the terms of the embargo [introduced after the Falklands war] and will not be licensed for export".

Rolls-Royce's decision to resupply the Argentine Navy is revealed in the second of two Channel 4 Dispatches investigations, to be screened tomorrow. The first programme revealed how MI6 had allowed the embargo to be circumvented in the late 1980s to gain detailed intelligence from within the Argentine military. The second programme reveals that Rolls- Royce and the Department of Trade and Industry changed their interpretation of the embargo rules but did not tell anybody else, including Parliament.

Contracts for exploration of the sea bed in the south Atlantic, which require Argentine co-operation, are due to be announced by Monday. Next week, the Argentine Chief of Defence Staff, Lieutenant General Martin Balza, is visiting Britain as part of a rapprochement between the two countries.

Six Argentine warships, including two British-built Type-42 Destroyers, are powered by Rolls Royce Tyne and Olympus engines. Until Spring last year, the supply of Tyne engine parts from Britain to Argentina was clearly prohibited, which caused the Argentine Navy considerable problems. It was this which led them to approach MI6's man in Argentina, Clive Russell, to ask for help in 1987, opening the way for him to penetrate the top- secret Argentine Navy base at Puerto Belgrano.

Channel 4 was able openly to gain access to Puerto Belgrano, where an Argentine Admiral, Marcelo Loza, proudly showed them a refurbished Rolls Royce Tyne engine which was on its way back to his flagship, the destroyer Hercules. He confirmed that the Argentine Navy's Rolls- Royce turbine maintenance was "up to date".

In a letter dated to Channel 4 on 16 October, the DTI said the embargo on arms exports to Argentina remained in place but that it referred to any engine component or assembly "specifically designed to fulfil the requirements imposed by the combat environment of a warship". Therefore, the DTI had "advised the company that ... it would not require a licence to export other Tyne [engine] components which were not specifically designed or modified for military use". In other words, no licence was now required for most of the engine components.

The letter concluded that the DTI's revised assessment "did not constitute either a variation or relaxation of the embargo".