Illegal Trade, Arms

Black and Gray Markets

The illegal arms trade is divided into two categories: the black and gray markets. The black market in arms is driven exclusively by individuals and private companies outside the scope of state influence or control. Gray market transactions are made by, or with the complicity of, national agencies. Political authorities usually turn a blind eye to arms trafficking or intentionally facilitate the flow of arms to their proxies or allies. Transactions within this sphere are covert and are not subject to licit trade procedures: official export licenses, end-user certification, or delivery verification. Arms-smuggling operations conducted by intelligence services to insurgent groups and other kind of allies have historically been a major source of illicit arms.

During the Cold War era, the utilization of arms trade transactions as an instrument of superpowers’ foreign policies was one of the defining features of the market. Arms were delivered to terrorists and rebel groups involved in wars throughout the world. The list of recipients includes groups from Ethiopia, Afghanistan, Angola, Cambodia, Namibia, Mozambique, and South Africa. One of the most famous cases of gray arms sales was the “arms for hostages” plan carried out by members of U.S. President Ronald Reagan's administration. It involved the U.S. government's covert arms sales operations to Iran. In 1985, arms (including 1,000 TOW missiles) were shipped from the United States to secure the release of seven U.S. citizens who were abducted in 1984 and 1985 by the Hezbollah organization. Sales were illegal under U.S. statutes and contradicted the Reagan administration's own stated policy of not negotiating or dealing with terrorists. Additionally, the profits from the sales were illegally diverted to Contra groups to finance their insurgency against a socialist regime in Nicaragua. The scandal became known as the Iran-Contra affair. During the 1980s, U.S. government agencies supplied weapons to guerrillas in Afghanistan, Angola, and Central America.

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