UK demanding payment for arms sales to Mubarak
Egypt owes £100 million to the Export Credits Guarantee Department (ECGD), nicknamed ‘the Department for Dodgy Deals’ because of its support for arms, aviation and fossil fuels.
The ECGD claim that they no longer have information about what the loans were made for. But the Jubilee Debt Campaign has discovered neglected documents in the National Archives, revealing that loans for arms were made to the Mubarak regime, and his predecessor Sadat, in the 1980s and 1970s. Weapons bought include Rapier and Swingfire missiles, Lynx helicopters and a tank factory.[1]
Tim Jones, policy officer of the Jubilee Debt Campaign, said:
“It is unjustifiable for the UK government to demand that the people of Egypt continue paying off loans which arose from the UK backing arms sales to Mubarak’s oppressive regime.”
“It’s time the coalition government put into action its fine words about supporting democracy in Egypt by coming clean on the origins of Egypt’s debt, and cancelling those debts that arose from exports which were damaging to Egypt’s people.”
The Liberal Democrats have a yet-to-be-implemented policy to conduct an audit of all debts owed to ECGD and rule invalid “any past lending that was recklessly given to dictators known not to be committed to spend the loans on development.”[2]
The news comes the week after Nick Clegg promised £5m of British money to help Egypt. He did not mention that the country is paying more than twice this amount to the UK every year in debt repayments; £12 million a year.[3]
The Jubilee Debt Campaign reiterated its call for Egypt’s £100m to be audited, so that loans used to fuel repression and corruption can be cancelled. Monday will see a lobby of Parliament and a protest outside the Department for Business, where Vince Cable, who oversees ECGD is based.
Egyptian campaigners in Cairo will also hold a conference on 31st October launching a campaign to audit and drop Egypt’s debt.
Dina Makram-Ebeid from the Popular Campaign to Drop Egypt's Debt said,
"We believe that Egypt's debt is Mubarak's debt. It is not the Egyptian people's. Egyptians never had a say in the borrowing that was being made in their name, let alone borrowing to buy arms.
If the U.K government is in earnest in its support for democracy in post-revolutionary Egypt, it should be telling the Egyptian people what they are paying for and not demanding that they carry the burden of repaying illegitimate loans. Dropping Egypt's debt is fundamental to achieving the goals of 'bread, freedom and human dignity' that the people revolted for early this year."
ENDS
Notes
Copies of documents from the National Archives are available by contacting Jubilee Debt Campaign.
[1] Egypt owes ECGD £100 million. It is currently making repayments of £12 million a year. The debt comes from ECGD backing loans to President Sadat (1970-1981) and his successor General Mubarak (1981-2011) in the 1970s and 1980s. Liberal Democrat Business Minister Ed Davey says the debt comes from 400 export contracts finalised before November 1986, but that the details of the individual contracts are no longer held.
However, new research from Jubilee Debt Campaign from documents uncovered in the national archives reveals that some of these export contracts were for arms sales to President Sadat and his successor Hosni Mubarak.
a) By 1979 £40 million of loans (20 per cent of all UK backed loans to Egypt) were for arms sales to President Sadat. UK arms exports to President Sadat included Swingfire missiles and Lynx helicopters, which were jointly financed between the UK loans for Egypt and finance from Saudi Arabia.
These loans were considered to be too risky to be financed under ECGD’s normal rules to ensure British taxpayers received their money back. They were made under a special ECGD provision (section two) where there is an overriding ‘national interest’ that the loans are made.
b) In 1979 and 1980 ECGD available backing for loans that were too risky for normal cover, but in the national interest, increased from £65 million to £400 million. This included backing loans of £85 million for Egypt to buy Rapier missiles from BAe.
This decision was taken by then Financial Secretary to the Treasury Nigel Lawson. Defence Minister Lord Strathcona told Nigel Lawson “though there is some doubt as to whether the Egyptian economy is yet strong enough to justify a large increase in cover, there is also a strong feeling that we should, in the national interest, give these BAe proposals favourable consideration”.
Foreign Office officials at the time said backing loans for arms sales was preferable to loans for power station equipment because this “would demonstrate our political support for Egypt during their current international difficulties. Power generating equipment would not”.
c) In 1985 and 1986 ECGD backed loans of £250 million for further arms sales. This included a tank factory near Cairo and a military city west of Alexandria. By 1986, ECGD had stopped backing loans for Egypt because of their high debt except in exceptional circumstances when British national interest required the loans to be made – such as arms deals.
[2] Liberal Democrats. (2010). Accountability to the poor: Policies on International Development. Policy Paper 97.
[3] Davey, E. (2011). Written answer to Willie Bain MP. 10/10/11.
