Human rights groups back parliamentary call for changes to UK export lending

Human rights and anti-arms trade campaigners have welcomed a hard-hitting report of an All-Party Parliamentary Inquiry which recommends widespread changes to UK Export Finance, the government department which provides financial support for British exporters.

The report’s recommendations to the government include conducting an audit into the debts owed to UK Export Finance, making human rights and environmental standards apply to all projects and transactions, imposition of penalties on companies that violate standards and a consultation on a prohibitions list for arms.

The inquiry was co-chaired by Lisa Nandy MP (Labour), Harriet Baldwin MP (Conservative) and Martin Horwood MP (Liberal Democrat).

Unlike some of its competitors, UK Export Finance does not conduct any human rights or environmental screening of loans of less than £10 million, or those payable over two years or less. In 2011/12, this included loans for: a methanol plant in Azerbaijan, a Chinese nuclear power plant, a natural gas delivery system in Nigeria and two coal mines in Russia.

The inquiry reveals that UK Export Finance, in its eagerness to help secure new contracts for British companies overseas, has not vetted all applications for their human rights impacts, has not established a grievance procedure and has not published impact assessments relating to projects that it supports.

Peter Frankental, Economic Relations Programme Director of Amnesty International said:

We welcome the report’s findings. The Government should take heed and ensure UK Export Finance operates in a way that is consistent with the international human rights standards that the UK is committed to. For too long this publicly funded body has been allowed to operate beneath the radar of government scrutiny for its human rights impacts. This reports holds out the prospect that it will be held properly accountable.

Around £2.3 billion of Third World Debt is owed to UK Export Finance. Figures released at the start of November show, for example, that three-quarters of Indonesia’s debt comes from loans to the previous authoritarian regime of President Suharto to buy weapons, some of which were used for repressive purposes. A quarter of Egypt’s debt comes from loans for military equipment to the past authoritarian regimes of General Mubarak and President Sadat.

Nick Dearden, Director of Jubilee Debt Campaign, said:

We are delighted that parliamentarians have called loudly for fundamental reform of the UK’s export credit department. The first step in that reform is to audit and wipe out the odious debts accumulated through years of selling weapons to dictatorial regimes. Step two is a new set of human rights standards to prevent such appalling decisions being taken again. We hope the Minister will bring forward legislation to enact these recommendations at the earliest opportunity.

UK Export Finance subsidises the arms trade by lending money for the purchase of weapons. For instance, in the 2000s UK Export Finance backed £750 million of loans to Saudi Arabia as part of the Al Yamamah deal, which later had a Serious Fraud Office investigation controversially cancelled by Tony Blair.

The inquiry recommends consulting on a prohibitions list for arms.

Ann Feltham from Campaign Against the Arms Trade(CAAT) said:

Historically, the arms companies have benefited more than any others from export credit guarantees, with arms giant BAE Systems topping the list of companies assisted. It is wrong that we are selling arms to repressive regimes like Saudi Arabia and the UAE and it is wrong that UK taxpayers are underwriting the costs. There should be no export credit for any military deals.

ENDS

For further information please contact:

• Amnesty International, Niall Couper, 020 7033 6414 or 07721 398984
• Jubilee Debt Campaign, Tim Jones, 020 7324 4722 or 07817 628196
• Campaign Against Arms Trade (CAAT), Kaye Stearman, 020 7281 0297 or mobile 07990 673232 or email media(at)caat·org·uk.

• NOTES

  1. Campaign Against Arms Trade (CAAT) in the UK works to end the international arms trade. The arms business has a devastating impact on human rights and society and damages economic development. Large-scale military procurement and arms exports only reinforce a militaristic approach to international problems. Around 75% of CAAT’s income is raised from individual supporters. In 2012, CAAT was awarded a Right Livelihood Award, the alternative Nobel Prize for its innovative and effective campaigning against the arms trade.
  2. UK Export Finance (UKEF), known until November 2011 as the Export Credits Guarantee Department (ECGD), is an independent Government department responsible to the Secretary of State for Business, Innovation & Skills. It guarantees that companies and banks involved in an export deal will not lose out if the overseas buyer does not pay, or makes late payments. Companies are charged a premium and UK Export Finance aims to break even, but any shortfall comes from the UK tax-payer. Read more on UK Export Finance.