Patria Case - European Union Art. 346 and Arms Trade

European Union Art. 346 and Arms Trade

The freedom of the press is protected as constitutional right in democratic countries. Finland takes it seriously and, in the Patria case, taught a lesson of democracy, of rule of law, and of business ethics to the world. Whether MOT's charges of bribery are true or not, Finland protected the freedom of speech better than United States, and against its own national interest. MOT report is of enormous value for the European Union and its attempt to put some democratic transparency in the European Defense procurement. Arms trade enjoys a particular status in EU, due to its essential connection with national state security, as per Art. 346 of the Lisbon Treaty:

The provisions of this Treaty shall not preclude the application of the following rules:
….(b) any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes.

— Art. 346 of the Lisbon Treaty

Art. 346, while granting member states the right to classify national information on the subject, i.e., to apply the State secret to arms production and trade of member states, explicitly prohibits the use of civilian (indirect) offset as form of distortion of free competition in the common market of the European Union. Some Aerospace and Defense companies abuse of indirect offsets is equivalent to straight bribery, if not worse. This is a level more sophisticated but not different from a bribe, and it is also the level of the commercial war between Patria and General Dynamics, in which Slovenia is just one of the European battles.

There are three reasonable hypotheses on the truth or falsity of the MOT program:

1. Finland and Slovenia are corrupt countries. The rest of European countries are not. Magnus Berglund discovered the corruption, and MOT program is truthful and accurate. It looks that Slovenia is a corruptible country, while countries like Portugal or Belgium (with over one billion euro purchase) are not. Slovenian politicians accept bribes, while the rest of the military sales involving Armoured Wheeled Infantry Vehicles is bribe-free. Furthermore, Finnish companies like Patria are ethnically inclined to corrupt foreign states ¨to obtain and retain business¨, while German Siemens, and U.S. General Dynamics have better policies against active and passive corruption.

2. Magnus Berglund's MOT Program is populist propaganda to increase audience. No valuable truth content. In fact Slovenian police did not even open an investigation on the corruption charges against its Prime Minister and military. Wiitakorpi is a scapegoat, not very smart, but he is completely innocent. No bribes. A variation on this hypothesis is that Wiitakorpi and friends pocketed themselves the alleged bribe, and used the bribe allegation to enrich themselves. Another variation on this hypothesis of falsity of MOT allegations is the some journalists have been paid or tricked by some Patria competitors, in order to create a false report. In all these cases there is no bribe, Slovenian politicians and public officials are clean and innocent.

3. The third reasonable hypothesis is that corruption of state and military officials in arms trade is a European plague. It is not a question about business ethics of Finnish businessmen and political integrity of Slovenian politicians and military (that allegedly shared 21 million Eur, 7,5% of the contract price paid by Slovenian taxpayers). MOT program is a burst of sunlight, in spite of some small errors or minor slips into sensationalism. Actually, the program is sensational, and if it was not, why did Slovenian Embassy in Finland request to stop the broadcast?