What is an arms broker and what are arms brokering activities?

Brokers can play an important role in facilitating or acting as intermediaries in the legitimate conventional arms trade. The phenomenon of individuals and companies facilitating and arranging arms deals between states and between states and arms producers – for example, bringing sellers and buyers together – is not new. However, since the 1990s, and particularly in conflicts in Angola and West Africa, high-profile cases and popular culture have raised greater awareness of arms brokering. This applies in particular to the way in which some unscrupulous brokers are actively engaged in the diversion and illicit trade inconventional arms, including small arms and light weapons (SALW), and ammunition to or between unauthorized (end-) users – including criminals, pirates, non-state armed groups (NSAGs) and groups listed as terrorist groups and their procurement networks. The fact that such entities were not explicitly controlled or regulated by modern transfer control systems appeared to be a blind spot that needed to be addressed to prevent the diversion of arms. The lack of regulation of arms brokering and brokers in many United Nations Member States means that even brokers that facilitate global transactions for the legitimate, licit arms trade may unwittingly be involved in, or facilitate rather than prevent, diversion of arms to the illicit market. Thus, when considering how to prevent and mitigate the risk of international arms transfers being diverted – and therefore posing a threat to peace, security and stability – the United Nations Security Council and multilateral arms control processes have examined the issue of brokering more closely since the 1990s. The Arms Trade Treaty (ATT) is not the first multilateral conventional arms control instrument to require states to take measures to regulate arms brokering and prevent or reduce the risk of brokers diverting conventional arms to the illicit arms trade. Over the past three decades, United Nations Member States have adopted three global instruments that include provisions to address illicit arms brokering:

•  The United Nations Programme of Action to Prevent, Combat and Eradicate the illicitTrade in Small Arms and Light Weapons in All its Aspects (PoA)
•  The United Nations Firearms Protocol 
• The Arms Trade Treaty (ATT)

 In addition, on numerous occasions the United Nations Security Council has expressed concern about and recalled the connection between illicit arms brokering and other illicit activities as a major factor fuelling and exacerbating conflicts. In resolutions on SALW, arms embargoes, non-proliferation, and eliminating the supply to and acquisition of weapons by terrorists, the Council has repeatedly called on states to implement their existing commitments. Thus, United Nations Member States have made multiple commitments to implement measures to regulate arms brokers and brokering activities and to take action to address illicit brokers and prevent illicit brokering in conventional arms. Moreover, the 116 ATT states parties are obliged under Article 10 of the Treaty to regulate brokering and under Article 11 to counter the diversionof conventional arms, including by illicit brokering. 

During the final rounds of ATT negotiations in2012 and 2013, a large majority of states from different regions noted that, without brokering controls, the Treaty would not be able to meet its stated objectives and purposes. A UNIDIR research report that informed the original negotiations found that definitions and other key issues had to be carefully considered when engaging in a dialogue on brokering inthe context of the ATT. Yet, since the ATT’s entry into force, there has been no dedicated dialogue on the effective implementation of its brokering and related provisions during the annual Conferences of States Parties (CSPs) and working group meetings. Furthermore, previous research and other available information indicate that implementation by states parties is uneven: some seem concerned, others face implementation challenges. In addition, some of the signatory states have concerns with regards to implementing the Treaty’s brokering provisions. This is compounded by the fact that, ever since the original negotiations of the Treaty and its entry into force, a number of unresolved questions, knowledge gaps and key issues have remained.

Neither the ATT nor the other international arms control instruments provide Definitions of “brokering activities” or “broker”. Among the dictionary definitions of brokering are,for example, “to arrange the details of an agreement, especially between different countries”, or to act as an intermediary, suchas “an agent who negotiates contracts ofpurchase and sale” (e.g., for commodities). While there is no universally accepted definition or agreement at the international level by all states of who an arms “broker” is and what “brokering activities” are, states in Africa, the Americas and Europe have nevertheless agreed definitions of brokers or of brokering of SALW in regional conventional arms control instruments or guidelines. The Wassenaar Arrangement, an export control regime, had also produced “best practices” for regulating brokering of a broad range of conventional arms and military equipment. In addition, the European Union explicitly calls for regulating the brokering of a widerange of military materiel. While these instruments and guidelines indicate that there is no single common approach, a shared common minimum understanding can be discerned – that is, that arms brokering involves mediating, facilitating or arranging an international arms transfer between an exporting party and animporting party in exchange for some form ofbenefit.

While global instruments on conventional arms control contain a definition of neither arms brokering nor brokering, since the late 1990s United Nations Member States have highlighted the need, when implementing the PoA, for more attention to be focused on illicit arms brokering.15 These calls led the United Nations General Assembly to establish a Group of Governmental Experts (GGE) on illicit brokering in small arms in 2006. Its 2007 report provided international (minimum) definitions of arms broker and brokering activities, which corresponds with the “minimum common” elements contained in the regional arrangements contained in Table 1. 

Accordingly, it defined an arms broker as: “a person or entity acting as an intermediary that brings together relevant parties and arranges or facilitates a potential transaction of [SALW] in return for some form of benefit, whether financial or otherwise.” This definition indicates that arms brokers can be either natural persons (e.g., one or more individuals) or legal persons (e.g., one or more companies) acting as intermediaries in the sale and purchase of SALW. It also indicates that the transaction may potentially take place – that is, it may or it may not be realized. In other words, brokers are often involved in finding opportunities and can open up negotiations that eventually may lead to a mediated or otherwise facilitated arms deal, but may not. The above definition accords with a general understanding of what a broker is and with the definitions contained in regional instruments. The GGE also provided an indicative list of arms brokering activities, including:

• Serving as a finder of business opportunities for one or more parties
•  Putting relevant parties in contact 
• Assisting parties in proposing, arranging or facilitating agreements or possible contracts between them 
•  Assisting parties in obtaining the necessary documentation 
•  Assisting parties in arranging the necessary payments

 However, the GGE also recognized that a broker based in one country can make deals involving transfers between two other countries of arms and ammunition that they own. Thus, an arms broker based in one country can be engaged in transfers between a second and a third country (of arms that the broker does not own); as well as engaged in transferring arms that they own between two other countries. This situation is not self-evident in all definitions of brokering (including those illustrated in Table 1) and was an important distinction made by the GGE to ensure that such practices are not used as a means to circumvent controls and regulatory practices. Taken together, the “mediation” role mentioned above and “dealing between two other countries” have come to be considered core brokering activities.

The potential recipient as well as and the potential supplier of arms are not in directly in contact with each other, but each knows and is known to the broker. The potential recipient of arms engages the broker to connect them with a supplier of arms and facilitate an arms transfer. The broker may approach only one potential supplier, or may ask around among several potential suppliers, in state C, while searching for the best price on the market to meet the requirements of state A (the recipient in state A). The broker facilitates and arranges a transfer between the potential recipient in state A and the potential supplier of arms in state C.

The potential recipient of arms engages the broker to facilitate the transfer of arms. The broker, located in state B and conducting most of its business and activities from state B, informs the potential recipient in state A that arms (that the broker owns) can be provided from the broker’s warehouse that is located in state C. The broker does not leave state B; but arranges for the arms that the broker owns to be supplied from state C to the potential recipient in state A. In both scenarios, the arms transfer does not physically pass through the national territory of state B (and are not necessarily captured by the arms export controls of state B, nor constitute an export from state B to state A nor an import by state A from state B). Yet, the competent national authorities of state B have in both scenarios an interest in knowing about the arranged arms deal and transfer of arms facilitated by the broker out of the national territory of state B. This, especially if state A or other potential entities and recipients of arms in state A are subject to a United Nations Security Council arms embargo or otherwise known to be involved in illicit activities and grave violations of international law including humanitarian law, and posing threats to peace, security, and stability.

The potential recipient and the potential suppliers of arms and military equipment are not in direct contact with each other, but each knows and is known to the broker. In one scenario, the potential recipient of arms engages the broker to connect them with a supplier of arms and facilitate an arms transfer. The broker engages the potential suppliers of arms (in states C and D), and while looking for the best market price, mediates between the potential suppliers to determine which supplier will meet the requirements of the potential recipients in state A. Eventually, the broker facilitates and arranges a deal between the potential recipient and supplier of arms.

This, for example, is a realistic scenario of a comparatively small state that engages in the international conventional arms trade for its security or defence needs and does so primarily through importation. Because it requires a range of different arms and military equipment, it asks a broker to engage with different suppliers to put together what may be referred to as a package that meets its requirements.

 Several select, simplified scenarios for mediating and dealing are provided below to show some of the different ways in which a brokers involved in an arms transfer are not necessarily “visible” to the competent national authorities responsible for regulating arms transfers in importing and exporting states, as well as states that are used for the transit or trans-shipment of arms.

The above-referred to discussions on the definition of brokering have caused confusion among some groups and in some parts of the world when, for example, a domestic firearms dealer is considered a broker, even though the activities of such a dealer do not involve international arms transfers between two other countries. While a domestic firearms dealer can purchase weapons directly (actually taking ownership) and resell them to authorized (end-)users on a domestic market; an arms broker acts as an intermediary who facilitates an international transfer of arms between buyers and sellers (without necessarily taking ownership). Thus, the terms (domestic) firearms “dealer”and “broker” refer to distinct roles, each with specific regulatory implications (those related to brokers discussed in Sections 3 and 4, with key elements related to national regulation of brokers included in Box 10). That said, a legal or natural person can simultaneously be a dealer for a domestic market as well as a broker for international transfers. Specifically, there can be situations in which the individual or company is:

 1. Only importing arms for resale on the domestic market of the country in which registered (i.e., the individual or company is a domestic dealer, not a broker); 

2. Only engaged in brokering arms between third countries (i.e., the individual or company is a broker, not a domestic dealer);

 3. Engaged both in importing arms for resale on the domestic market in the country in which registered and in brokering arms between third countries (i.e., the individual or company is both, domestically dealing and a broker involved in and facilitating international arms transfers). 

Through their networks or contacts, an arms broker may be able to mediate arms deals or act as intermediary across one or several different countries and regions or even globally, and may wittingly or unwittingly facilitate the diversion of conventional arms. When discussing the regulation of brokering, the scope of jurisdiction of the brokering control measures must therefore be carefully considered. Scope of jurisdiction, extraterritoriality and the three common types of regulatory approach are discussed in Box 3. Implications are further illustrated in the infographic and described in the scenarios in Box 4.

In addition to the “core brokering activities”, regional instruments and some states regulate and control the provision of closely “associated brokering activities” (or ancillary or related services). This includes providing or facilitating the provision of: 

• Technical assistance 
• Training 
• Transport 
• Freight forwarding 
•  Storage 
• Finance 
•  Insurance 
• Maintenance 
•  Security 
• Other services 

 As noted in Section 1, definitional issues have to be carefully considered when engaging in a dialogue on brokers and brokering in the context of the ATT. While the provision of such closely associated brokering services may be distinct from the core brokering activities in the strict sense, in practice the distinction is often less clear. 

While these activities in themselves do not necessarily constitute brokering according to the definition provided in some regional instruments, they might be naturally and regularly undertaken by brokers as part of the process of facilitating an arms deal. In reality, a broker (i.e., individuals or companies) may in a given context and situation be offering or undertaking or be otherwise involved in both “core brokering activities” and also “closely associated brokering activities” (as shown in Sections 2 and 3). 

Box 5 summarizes core brokering and closely associated activities.