Arms sales
Historically, one business has benefited more than any other from export credit guarantees – the arms business. Exporting military equipment can fuel conflict and raise regional tensions, give support to repressive regimes and take limited resources that might otherwise have been used to provide education, health care and housing.
Even though arms account for just 1.5% of total UK exports, in 2006-7, 42% of all export credits were for military goods and, in 2007-8, the figure was even higher, 57%. Arms manufacturer BAE Systems topped the list of companies receiving export credit guarantees.
This export credit support was given for very few deals. In 2006-7 the entire 42% was accounted for by BAE’s arms sales to Saudi Arabia. At £750million this was also by far and away the ECGD’s biggest liability in 2007-8, with VT Shipbuilding International’s sale Offshore Patrol Vessels to Trinidad & Tobago coming second.
However, it all changed in 2008-9 when just 1% of ECGD support was for military deals. A few months earlier it had been revealed that BAE had ended the support for its Saudi arms deals with effect from September 2008, just before the publication of a highly critical report from the Organisation for Economic Cooperation and Development which followed from the Government’s December 2006 decision to stop the Serious Fraud Office inquiry into allegations of corruption around BAE’s Saudi deals.
The ECGD’s support for military deals remained at 1% in 2009/10, but rose to 4% in 2010/11 with a £113.4million guarantee for military refuelling planes sold to the United Arab Emirates.
What we are calling for:
- Adopt a prohibitions list of activities that will not be supported by the ECGD – this means that a Government could exclude providing export credit support for military equipment.
- To see our full recommendations see the network’s manifesto