HERSTAL, Belgium — Amid the abandoned steel mills and soot-stained row houses that make up the post-industrial sprawl surrounding the city of Liege, the headquarters of FN Herstal stand out.
FN's vast complex of redbrick factories is thriving, rare in this once-powerful steel-and-coal region that has suffered decades of economic decline.
One of Europe's leading producers of small arms, FN's brands include Browning and Winchester. US special forces use its state-of-the-art SCAR rifles, while the Secret Service and Mexican drug cartels favor its Five-seveN handguns.
As debt-ridden European countries cut their defense budgets, the small-arms business is seeking overseas markets. Exports of arms and ammunition from the 27 European Union countries totaled almost $5 billion last year, according to EU statistics.
The arms industry employs around 97,000 people on a continent desperate for jobs — recent figures showed 25 million people out of work in the EU. But that poses a dilemma in a part of the world in which unease over the arms trade also runs deep among politicians and the public.
"Small arms are responsible for more casualties than any other type of weapon,” Germany's Foreign Ministry states on its website. “They aggravate conflicts, destabilize societies and hinder development."
Nevertheless, Germany ranks third among global exporters of firearms and ammunition, according to the Norwegian Initiative on Small Arms Transfers, or NISAT, with sales worth $376 million in 2010 — 10 percent of the world's total.
Like other European countries, Germany wants to sustain its arms industry while seeking international controls on where the weapons go. Government policy prohibits arms exports to war zones or countries where they may be used to commit human rights abuses. In July, Germany joined Britain, Sweden and France in calling for a new UN treaty to regulate the arms trade and combat illegal trafficking.
However, German arms sales in 2010 included $13 million worth of small-caliber guns to Russia, $12 million in ammunition to Saudi Arabia, and $53,000 in unspecified military electronics to Colombia, according to the latest EU arms sales report.
Beyond such official sales, campaigners claim, German arms are often sold on to war zones or oppressive regimes. The government was embarrassed last year when Libyan rebels helped themselves to state-of-the-art Heckler & Koch assault rifles discovered in the arsenal of Col. Muammar Gaddafi.
"Supplying weapons and equipment that are then used in wars and for the purpose of oppression within states by dictatorial regimes is an ongoing scandal of German foreign and economic foreign policy," says Margot Kassmann, Lutheran bishop of Hanover and patron of Aktion Aufshrei (Campaign Outcry) an anti-arms trade group set up last year.
Germany is not alone. Data from Norway's NISAT shows Italy is actually Europe's biggest small-arms exporter. Its $402 million in sales are second only to the USA’s $673 million in 2010. Switzerland, Austria, Russia and Spain also all make it into the top 10.
Little Belgium comes in at No. 11 with sales worth $92 million, thanks largely to the FN factory outside Liege.
FN Herstal's history dates back to 1889, when the Fabrique National — French for National Factory — started making rifles for the Belgian army. Today it epitomizes the contradictions facing European politicians seeking to reconcile high ideals with hard economics.
The company, which also runs manufacturing units in Portugal, Japan and South Carolina, is 100 percent owned by the government of Belgium's French-speaking Wallonia region — currently a coalition of Socialists, Christian democrats and a traditionally pacifist green party called Ecolo.
"In a general and philosophical way, we are not really in the favor of the arms trade, but we have to be realistic," says Luc Tiberghien, an Ecolo member of the Wallonia regional parliament. "This is an important economic sector for the Liege region, so we have to live with it."
FN employs 1,300 people in its Herstal factory, just over half its global workforce. That's a far cry from the 15,000 who worked there in the early 1960s, but still vitally important given that unemployment in Liege and suburbs like Herstal is running at more than 20 percent.
Speaking in an interview, Tiberghien said his party made itself unpopular in the city by successfully lobbying for tougher restrictions to ensure FN's weapons don't end up in the wrong hands. Before his party joined the regional government, Tiberghien campaigned against a contract that saw $16 million worth of rifles, machine guns, pistols, ammunition and "less lethal" riot guns shipped to Gaddafi in 2009.
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Despite the increased regulations, FN weapons continue to show up in the wrong hands.
Its Five-seveN pistols together with AK-47 style rifles made up the bulk of the more than 2,000 guns sent to Mexico — where an influx of small arms is helping fuel tens of thousands of deaths — for Operation Fast and Furious, a controversial American sting that targeted Mexican drug cartels. FN rifles have also been spotted in the hands of Syrian rebels, prompting concerns they may have been re-exported via Libya or Gulf countries.
"In 98 percent of cases, there are no problems with export licenses,” Tiberghien said in an interview. “Seventy-five percent go to European countries and the rest to places like the United States. It's only 3 or 4 percent of the annual sales that are problematic, mainly exports to the Gulf countries.”
However, Saudi Arabia and Qatar are “important clients” for FN Herstal, he added. “For those markets, if we don't have the right the assurances, sometimes arms are transferred from these countries to others that are even more problematic, like Libya or Syria where they end up with one side or the other,” he explained. “That's not right."