21 May 2004
Leading think-tanks and lobby groups this week intensified their opposition to the government's use of public subsidies to support arms dealers in the wake of a damning report by MPs.
David Mepham, senior research fellow at the Institute for Public Policy Research, told Public Finance there was 'no longer an argument for using billions of pounds-worth of export credits to support arms traders – particularly for deals that involve the supply of arms to the world's poorest countries'.
Export credits effectively subsidise UK traders by underwriting the cost of supplying equipment against the risk of non-payment by the purchaser.
About 30% of credits supplied by the government's Export Credits Guarantee Department relate to the arms sector. In 2001/02, the state underwrote £3.5bn in credits, 49% of which related to one fighter jet deal with South Africa.
Mepham also called for an end to other public subsidies to the arms industry, such as support for the Defence Export Services Organisation, defence trade fairs and diplomatic work. This support cost £23m in 2002.
The issue of arms deals returned to prominence after a report by the Commons' joint committee on defence exports on May 19. It attacks a lack of 'political backbone' in enforcing restrictions on the way UK-made arms are used abroad.
The MPs, drawn from the defence, foreign affairs and trade and industry select committees, claim that end-use certificates – designed to prevent the misuse of exported arms – 'are not worth the paper they are written on' in the absence of effective control over the expanding industry.
Using the example of exports to Indonesia, MPs accused ministers of failing to investigate adequately claims that UK Scorpion armoured vehicles and Hawk aircraft had been used to quell separatist uprisings. Such use would breach human rights laws.
The Foreign and Commonwealth Office insisted the government had made 'unprecedented improvements to the transparency and accountability of UK arms exports'. It dismissed claims about the use of weapons in the Indonesian Aceh region as containing 'no credible evidence'.
Ann Feltham, joint co-ordinator of the Campaign Against Arms Trade, told Public Finance: 'This entire issue could be resolved if the government put an end to export credits, because the market couldn't function without them in developing countries where human rights concerns are perhaps greater.'
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