MPs, MEPs, or ministers should not be allowed to hold financial stakes in defense companies while in office.

This practice creates an inherent and significant conflict of interest, undermining the integrity of public office and eroding public trust.

While existing regulations in the UK and EU aim to manage these conflicts, they are largely insufficient and fail to prevent the appearance, or reality, of a politician's personal financial gain influencing their public duties.

The Nature of the Conflict of Interest

A conflict of interest arises when a public official's personal financial or other interests could improperly influence their official decisions. In the context of defense, this is particularly problematic due to the high-stakes nature of military procurement and policy.

• Financial Incentive to Increase Spending: A politician with a financial stake in a defense company has a direct personal interest in that company's success. As a result, they may be incentivized to vote for higher military budgets, support the sale of weapons to questionable regimes, or advocate for costly, non-competitive contracts for their company's products. This creates a clear misalignment between the politician's duty to the public and their private financial gain.

• Access to Non-Public Information: Politicians and ministers, especially those on defense or foreign affairs committees, have access to a wealth of non-public information. This includes details about future military strategy, procurement plans, and geopolitical threat assessments. Holding shares in a defense company gives them an opportunity to use this privileged information for personal financial gain, an act that is both ethically and legally dubious.

• The Appearance of Impropriety: Even if a politician does not use their position to directly benefit their shares, the mere appearance of a conflict of interest can be just as damaging. It fuels public cynicism and a perception that politicians are self-serving and that defense policy is being made to enrich a select few rather than to ensure national security.

Current Regulations and Their Failures

Both the UK and the EU have rules and ethics codes in place to manage conflicts of interest, but they are often riddled with loopholes and lack strong enforcement mechanisms.

• United Kingdom: In the UK, MPs and ministers are required to declare their financial interests, including shareholdings, in public registers.

  • House of Commons Register of Members' Financial Interests: This register is a key transparency tool. However, it requires a member to declare only interests that "might reasonably be thought to influence what they say or do." This leaves a great deal of room for subjective interpretation and hides many smaller, though potentially influential, shareholdings.

  • The Ministerial Code: Ministers have a stricter duty to avoid conflicts of interest, and the Code states they must "ensure that no conflict arises, or could reasonably be perceived to arise, between their public duties and their private interests." They are required to declare relevant interests to their Permanent Secretary, and these declarations are sometimes published. However, the ultimate arbiter of these rules is the Prime Minister, and there is no independent body with the power to investigate or sanction a minister for a breach of the code. This lack of independent oversight renders the code a political instrument rather than a robust safeguard.

• European Union: MEPs are also subject to codes of conduct regarding financial interests.

  • MEPs' Declaration of Financial Interests: MEPs are required to declare their financial interests at the start of their term, including any holdings in a company where there are potential public policy implications. They must update this declaration annually.

  • The Code of Conduct: The Code of Conduct for MEPs states that they "shall act solely in the public interest" and avoid conflicts of interest. However, like the UK system, the enforcement mechanism is weak. Breaches of the code are handled by an Advisory Committee on the Conduct of Members, which can make recommendations, but the final decision often rests with the President of the Parliament. .

The Call for Stronger Measures

To effectively address this conflict of interest, a ban on holding financial stakes in defense companies while in office is the clearest and most direct solution.

• Mandatory Divestment: A simple, effective rule would require politicians to either sell or place their defense industry holdings in a blind trust upon taking office. A blind trust, where the politician has no knowledge of the specific assets held within it, is a key mechanism for insulating them from conflicts of interest. However, even this system can be gamed, and a blanket ban is often seen as a more robust solution.

• Broader Prohibitions: The prohibition should extend to family members (spouses and dependent children) to prevent politicians from using their families as a proxy for their own financial interests.

• Independent Enforcement: The rules should be enforced by an independent body with the power to investigate, sanction, and, where necessary, refer cases for criminal prosecution. This removes the political influence that currently undermines the system in both the UK and the EU.

In conclusion, the practice of politicians holding financial stakes in defense companies is a clear conflict of interest. While current rules require disclosure, they do not prevent this practice, and their enforcement is often weak. The best way to ensure that military spending and defense policy are made in the national interest—and not for private profit—is to implement a clear and enforceable ban on all such financial holdings.