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05 Mar 07. U.K.’s DESO Gets Hard Look in Cost-Cutting Review. The Defence Exports Services Organisation (DESO), which is the center of a U.K. foreign-sales effort that has netted British industry $37.2bn in business since 2000, finds its existence being questioned as the Labour government seeks to cut Ministry of Defence costs as part of the Treasury’s comprehensive spending review. Due out later this year, the review will set spending levels for defense and other departments between 2008-09 and 2010-11. “As part of the comprehensive spending review, one of dozens of studies all over government looked at has been DESO. That has been a root-and-branch look at: should we exist, if we should, how should we exist and what size should we be,” said DESO boss Alan Garwood.
Garwood said the review’s recommendations have been presented to the MoD’s permanent secretary, the department’s senior civil servant. “The recommendations have yet to be discussed with the secretary of state, so I can’t tell you what it will say at this point,” he said during the IDEX show in Abu Dhabi, United Arab Emirates, last month. One analyst based here said DESO needs to be overhauled but couldn’t be done away with. “The review will be welcomed by industry, many of whom feel it does a good job but needs to be more targeted and less bureaucratic,” he said. Scrapping DESO also would reverse the government’s 2005 defense industrial strategy and hand a strong advantage to Britain’s rivals in the defense export field, said the analyst. Retired Maj. Gen. Alan Sharman, who runs the Defence Manufacturers Association lobbying group, said DESO was much envied by other nations, and said it played a crucial role at the political and diplomatic level with its government-to-government links. The British capture around 20 percent of the world defense export market, principally through its links with Saudi Arabia. Market share is under increasing pressure as France, Israel, Russia, the United States and other nations step up efforts to sell overseas. Garwood said that DESO is not immune to cuts, but noted that staff numbers have dropped considerably in recent years already. “We could do it with a bit smaller staff, but we would have to start trading activities,” Garwood said. DESO, which employs around 450 people, estimates that between 65,000 and 80,000 jobs depend on defense exports. The organization’s last major export win was helping the AgustaWestland EH101 secure the contract to equip the U.S. presidential helicopter fleet. More recently, it has been involved in the controversial agreement with Saudi Arabia to buy 72 Typhoon combat aircraft from BAE Systems and its partners in the Eurofighter consortium. That deal is close to approval.
Comment: DESO is a major contributor to the U.K. balance of payments but Tony and his cronies appear to be embarrassed that the U.K. is a major seller of arms in spite of all other countries raising arms sales, particularly Germany. Gordon Brown is known top despise the defence industry whilst Tony feels happier in the company of his rockstar, retail and media moguls. The cancellation of the DESO function at last year’s AUSA in October, taken over by BATTLESPACE was a strong sign in spite of DESO protestations to the contrary, that the writing was on the wall, for DESO’s budget and its very existence. This spat may well spill over to DSEI where Reed is fighting a rearguard action with its shareholders as to the merits of publishing the Lancet and many other profitable journals at the same time as hosting Arms Fairs which account for 10% of Exhibition Revenue. The acid test will be whether Ken Livingstone continues to allow DSEI in London if there is any trouble at this year’s show. Perhaps Tony and his cronies will think again when the Defence Budget doubled as we rely more on imports, whatever the DIS says and that British soldiers are killed when the ability to perform UORs evaporates. With any luck St Tony and his Re

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