New report details string of ‘dodgy deals’ at export support body
As new Trade Minister Stephen Green embarks on a national tour to promote British exports, Jubilee Debt Campaign warns that Britain’s export support body is not up to the job (1).
A report released by the organisation today (2) exposes a history of backing projects by large corporations in a handful of controversial sectors. The projects have led to human rights abuses, environmental destruction and corruption in the developing world, and often failed to deliver even on their stated aims.
Britain’s export promotion body, the Export Credits Guarantee Department (ECGD), has also undermined Britain’s international development goals by leaving countries like Kenya, Vietnam, Indonesia and Pakistan with £2 billion of debts from failed export deals – 96% of Third World Debt ‘owed’ to the UK today. (3)
Jubilee Debt Campaign warns Lord Green that the Government’s plans for an export-led recovery will lead to human rights abuses, climate change and deepening poverty unless there is a radical overhaul of the ECGD. The group argues that the Canary Wharf-based department, which faces a beefed up role in contributing to private sector growth, needs stronger standards to ensure its support helps both British industry and the people and environments of the countries it invests in.
The report, The Department for Dodgy Deals: Ending the UK’s support for toxic debt, finds that:
- Over £2 billion of ‘toxic debts’ from failed UK exports are being repaid by developing countries, making up 96% of Third World debt to the UK. Developing countries including Indonesia, Kenya and Pakistan have paid an average of £700 million a year to the department over recent years.
- Indonesia is still repaying debts based on arms sales to General Suharto and an overpriced, unproductive hydro-electric dam in Kenya. It has also supported a white elephant power plant in India, a ‘human rights free’ oil pipeline in the Caucasus and a dam in Lesotho which involved serious corruption.
- The Coalition government has failed to act on its pledge to end fossil fuel subsidies through the ECGD, despite taking action to beef up the Department’s role. The Liberal Democrats have a party policy to stop supporting arms sales through the ECGD.
Nick Dearden, Director of Jubilee Debt Campaign said:
“The ECGD is not fit for purpose. For too long, this rogue department has acted with impunity, fuelling human rights abuses and accumulating an unjust debt burden from the developing world of over £2 billion.”
“We understand that British industry needs help but such support must not come at the expense of people and planet. Taxpayers’ money should be used to support new, green industries, not environmental destruction and poverty. Yet developing countries currently repay hundreds of millions of pounds every year to the UK for destructive projects which caused harm to their country and people – and which should never have been backed by the British Government.”
“Lord Green needs to stop the dodgy deals and clean up his department’s act.”
Over 100 MPs have signed a parliamentary motion calling for an urgent review of the ECGD, and 7,000 members of the public have written to Business Secretary Vince Cable (4). Cable told constituents in November he was unaware that his predecessor Lord Mandelson had stripped back rules on responsible export support in early 2010 (5).
Lord Green’s appointment this month caused controversy after he was reported to be unwilling to promote arms exports. However within days he had reportedly had a change of heart (6).
For more information contact 07932 335 464 or 020 7324 4722.
Jubilee Debt Campaign is the UK coalition campaigning for cancellation of unjust and unpayable poor country debts.
1. Lord Green’s tour of Britain will kick off in Cambridge, and take in Northern England, parts of the north of England and Birmingham in the next few weeks.http://blogs.news.sky.com/kleinman/Post:eab4f37e-47ff-4996-92a0-b95230358955
2. The report is available at https://debtjustice.org.uk/reports-briefings/report/the-department-for-dodgy-deals.
3. The Export Credits Guarantee Department (ECGD) is the UK’s export credit agency, reporting to the Department for Business, Innovation and Skills. It provides insurance and guarantees to UK exporters entering ‘risky’ markets. Traditionally 75% of ECGD support has been given to arms, aerospace and carbon-intensive industries. In the event of an ECGD financed company not being paid by the relevant importing party, it is able to recover its project costs from the ECGD. The ECGD may then try to recover the total sum paid from the government of the recipient country – in effect it will become debt which that government owes to the UK Government. In this way developing countries have accumulated significant quantities of bi-lateral debt.
4. See Early Day Motion 622, http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=41579&SESSION=905 .
5. Notes of meeting between Twickenham Jubilee Debt Campaign group and Vince Cable Friday 5 November 2010, available on request.
6. See http://www.telegraph.co.uk/finance/newsbysector/industry/defence/8244607/Trade-Minister-Lord-Green-refuses-to-back-UK-arms-industry.htm l and http://www.telegraph.co.uk/finance/newsbysector/industry/defence/8245829/Trade-Minister-Lord-Green-overcomes-personal-issues-to-back-arms-industry.htm l.