Swiss government scraps Ruag Brazil factory plans

The intention of the new RUAG factory in Brazil was to break the internal monopoly on ammunition production. But politicians in Switzerland feared that this would actually be a way of circumventing the arms export rules, to sell to countries not allowed by the government. Keystone

Switzerland’s state-owned defence contractor, Ruag, has abandoned plans to build a factory in Brazil. The government told the company to stand down due to the reputational risk to Switzerland.

In a statement published on Thursday, the government said it had already communicated this position to the board of directors of Ruag Holding. The latter had accepted the cabinet’s decisions and recommendations. The Swiss government is the sole shareholder of the arms firm.

In April, 16 organisations called on the government to reverse the arms company’s decision to open an ammunition factory in Brasil. They invoked the very high crime rate in Brazil.

The trigger for the mobilisation was the murder of leftwing politician Marielle Franco on March 14 in Rio de Janeiro. She headed a commission to monitor military and police commitments against crime in that city.

According to the government, Ruag sees its subsidiary Ammotec, which wanted to build the plant, as an opportunity to expand into an important international market. The aim was to support the Brazilian government’s desire to break the monopoly that dominates the ammunition market in its own country.

The armaments company has also assured the government that it applies a policy of zero tolerance against corruption. For projects developed in countries with high compliance risks, it must also use specialized local external consultants.

The government expects Ruag to impose compliance with Swiss legislation on war materiel on its foreign subsidiaries. In its annual report, the board of directors of the Bern-based group states that it meets this expectation.

The issue of Swiss-produced war materials and exports has been in the spotlight in Switzerland in recent months. In June, the government proposed allowing weapons to be exported to countries in the throes of internal conflict provided it could be established that they would not be used by warring parties. This relaxation has been criticized by activists. The president of the International Committee of the Red Cross (ICRC), Peter Maurer, said such a move would damage the country’s “humanitarian profile”. 

Earlier this week, a Federal Audit Office (FAO)External link report stated that weapons exporters already exploit enough regulatory loopholes to make a proposed relaxation of the Swiss arms trade a largely academic exercise. It gave examples of loopholes that allow a certain amount of weapons parts to be shipped to intermediate third countries for assembly without the need for an agreement that forbids the re-export of the finished articles to other states.

The FAO gave examples of these so-called “alternative export opportunities”, such as tanks that ended up in Qatar via Canada and of pistol parts that made their way to Saudi Arabia after passing through the United States.