MPs Join NGOs for Memorandum on Export Credit Guarantees

Cross Party Letter to Government

Non-Governmental Organisations including Campaign Against Arms Trade, The Corner House, Friends of the Earth, Kurdish Human Rights Project, World Development Movement, and the World-wide Fund For Nature have joined together to produce a memorandum on the reform of the Export Credits Guarantee Department. The memorandum outlines the minimum conditions necessary to bring the ECGD’s operations in line with the stated policies of the UK government on sustainable development, human rights, open government and putting ethics at the centre of foreign policy.

The memorandum states that the ECGD should be prohibited from financing non-productive investments, a category which includes arms. The coalition further recommends that the UK Government play a leading role in negotiations to secure a multilateral agreement to abolish the provision of export credit for military purposes. The memorandum demands that details on ECGD cover for arms sales should be included in the next Annual Report on Strategic Exports in the interests of making the Government’s reporting more accessible to Parliament and the public.

Such reforms are wholly in line with the international Jakarta Declaration for Reform of Official Export Credit and Investment Insurance Agencies, endorsed by 347 NGOs from 45 countries.

Arms deals receive a disproportionately high level of ECG backing. Last year credits for military exports accounted for 52% of projects underwritten by the ECGD – an incredible proportion of the allocation given that military exports generally comprise less than 3% of total visible exports.

Rachel Harford of CAAT said: Arms are the ultimate non-productive expenditure, diverting the resources of the buying country, and having a hugely detrimental effect on their development, environment and human rights of that country. And if payments are ultimately not met by the client country, the UK taxpayer picks up the tab.

The ECGD has a history of providing cover for countries such as Iraq, which still owes £26 million for military equipment. This deal clearly showed the financial risk as well as the dubious morality inherent in underwriting exports to military dictatorships. The sale of Hawks to Indonesia, also extremely controversial, was underwritten by guarantees. Due to the economic crisis in ’98, the payments for the Hawks were rescheduled. Even if the payments are now made, this deal has brought the ECGD and the UK Government into disrepute. The financial wisdom of such a deal is clearly questionable.

There have been a number of claims made relating to military guarantees. According to the ECGD, claims have been made for £253 million from Jordan, £88 million from Algeria and £46 million from Egypt. ECGs have recently been issued to support military to debtor countries. Brazil, which owes £523.7 million to the UK for military and civil goods, is a leading example. Cover for £29.3 million of military exports was provided in 1998-99, while it still owed much from previous contracts.

In addition, the International Development Select Committee made recommendations in its recent report to the ECGD review; that the ECGD should not provide cover for any project which infringes the human rights of workers, local populations or other affected persons. The report also recommends a clear commitment from the ECGD to respect and protect internationally agreed human rights in all its activity and for the UK to press within the ECGD for all export credit agencies to agree a human rights policy. The committee also recommends that the FCO present an analysis to the ECGD of the human rights implications of every project for which ECGD is considering cover.


Contact: Rachel Harford on 020 7281 0297 or 0958 449 006 for copies of memorandum and the cross party letter to government departments.

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