The issue covers the scandal of UK arms exports to Argentina before the Falklands War, and the export of five Hawk Aircraft to the Mugabe administration between 1989 and 1992.

Please find the briefing attached below. If you would like to take action, you can email this briefing as an attachment to your MP (email address can be found on http://www.theyworkforyou.com/).

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The post Clean Up Britain’s Exports: New Summer Briefing appeared first on Jubilee Scotland.

Economics on the one hand, and justice and human rights issues on the other hand, are often discussed as separate phenomena; as ways of looking at the world that don’t connect or intersect. But I believe that it’s of fundamental importance that we consider them alongside each other. In this blog I would like to use the example of Egypt’s arms debt to the UK to argue this point, touching on the gaps in international law and the importance of lending in the often violent shaping of the political map.

Jubilee Scotland is campaigning at the moment alongside its sister organisation – Jubilee Debt Campaign – for the cancellation of $100 million is owed by the Egyptian people to the UK government.

We are asking for it to be cancelled because we believe it to be an odious debt. An odious debt is one taken on by an unelected dictator – in this case Hosni Mubarak – the repayment for which is then demanded from the people of the country. This is the moral equivalent of someone breaking into your house and taking out a huge second mortgage against it, which you then have to repay when you get back into the house.

This would be enough to make the debt odious, but in the case of Egypt there is another layer to consider. The debt was used to pay for Rapier and Swingfire missiles, Lynx helicopters and a tank factory, weaponry which would actually have been used to shore up the illegitimate Mubarak regime. So to use our previous analogy, the house owner is also having to pay for the weapons that kept them out of their own house

Unfortunately, international law doesn’t recognise the concept of odious debt. This ties into the wider fact that it only recognises sovereign states and leaders; individuals, or whole peoples even, have no personality in its eyes. To go back to the house example, national law would seek to protect the interest of the party whose house had been stolen, but international law, if it operated the same way, would recognise the existence of the house, but assume that whoever was in charge of the house was the rightful owner – a kind of ‘finders-keepers’ approach to ownership. It is not a Code of Law in the true sense, as first formulated in ancient Babylon, because it does not protect the weak against the strong. It’s a system in which individuals – and whole peoples – are totally exposed to the Great Predators of the global economy: dictators, arms manufacturers, and lenders.

Mubarak’s arms debts are owed to a branch of the UK government called the Export Credit Guarantee Department (now renamed as UK Export finance), who use British tax-payers’ money to underwrite ‘high risk’ exports such as arms deals, meaning that both the arms exporter and the dictator remove themselves from the equation, leaving a debt owed by the people who suffered from the deal to us, the UK taxpayers.

The Export Credit Guarantee Department are the UK’s Export Credit Agency. Every major world power has one of these bodies, whose job it is to promote and support risky investments overseas. By using tax-payers’ money to underwrite deals they totally transform the risk profile of these risky deals, in effect creating a market where otherwise there wouldn’t be one.

For decades, Export Credit Agencies such as the ECGD have been used to set up trading relations with dictators in all parts of the world, including President Suharto in Indonesia and President Marcos in the Philippines. Their activities have provided domestic weapons manufacturers with stable overseas markets, have shored up regimes sympathetic to the West and have ensured a steady flow of debt repayments.

Export Credit Agency lending forms part of a wider portfolio of lending and aid – and it’s worth knowing that to qualify as ‘Overseas Development Assistance’ (the most widely used concept of aid) capital flows only have to have a 25% component of grant finances. This lending has been used for many decades to shape the map of the world, and to ensure that governments sympathetic to lending powers remained in charge of the house.

By sympathetic, we mean sympathetic to the supporting superpower, rather than sympathetic to the people of the country. As Franklin Roosevelt famously said of Nicaragua’s dictator Somoza, ‘he may be a son of a bitch, but he’s our son of a bitch.’

Because the bloody origins of many of these debts are not widely discussed, all debt campaigners are frequently asked whether we should in fact cancel debts to poor countries without being very vigilant on how the money is spent. To my mind this would be shutting the stable door after the horse has bolted. In the case of an Egypt or Indonesia the money for these debts has already been spent by a dictator on arms – often under the lender’s very vigilant eye.

Cancelling the debts is morally essential because it’s wrong to keep collecting money from the people whose oppression we have unwittingly colluded in. But if we are serious about stopping oppression we need to put a stop to bad lending, not just cancelling pre-existing bad debt.

In 1997, when Robin Cook became Foreign Secretary, he spoke of an ‘ethical foreign policy’. This statement was widely derided at the time as being a joke. In 1998, the scoffers were to some extent proved to be right, when the UK’s Export Credit Guarantee Department underwrote a huge sale of jet-fighters to the Indonesian dictator Suharto. The phrase ‘ethical foreign policy’ – even the idea of having an ethical foreign policy – became at this point even more bankrupt.

This trend needs I believe to be reversed. We may view ourselves as individuals, or as citizens of the world, we may campaign or give as individuals, and strive as campaigners to change the international system but we should not ignore the large proportion of our individual global impact which is mediated through UK foreign policy. It’s for this reason that, as well as building individual links with debt campaigners around the world, and while campaigning for an international system through which odious debts can be recognised and cancelled as as such, Jubilee Scotland also campaigns – alongside Campaign Against the Arms Trade and Amnesty International – for the radical reform of the Export Credit Guarantee Department.

Find our more about the campaign to end unfair lending at www.cleanupexports.org.uk and Jubilee Scotland at www.jubileescotland.org.uk

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The post Finance and Human Rights appeared first on Jubilee Scotland.

I had noticed throughout the speaker tour that the more confrontational and technical his interlocutors, the more Ardi rose to the challenge, and this meeting was no exception. He refused to be intimidated by the plutocratic architecture of Canary Wharf – ‘the elevator is speaking to us’ he remarked with a smile as we disembarked on the 13th floor of Exchange Tower – and repeatedly brought the discussion back to the core concerns of our campaign.

Ardi stressed the difficulty the people of Indonesia had in finding their feet when around 60% of their taxes went to debt repayments. He did not beg, but stressed the growth of a strong grass-roots movement in his country that was increasingly pushing the Indonesian government to de-recognise it’s illegitimate debts. Within this context I suggested that the Jubilee ‘Lift the Lid’ campaign, with its emphasis on an international and multilateral consensus on odious debts, was worthy of their serious attention.

It’s difficult to gauge how much of this serious attention we got. Certainly the meeting room was stuffed with officials of some seniority, including the CEO – Patrick Crawford. We encountered some of the usual red herrings – including the obligatory statement that it is pointless for the UK to clean up its own act when China behaves in the way it does. We were also told that standards had improved in the last few years, and that no new deals are being made to Indonesia.

While these last statements are possibly true, they are impossible to verify as long as so many ECGD-backed deals remain shrouded in commercial confidentiality. And while it felt exciting to expose this most business-minded of departments to the views of a campaigner from the Global South, it will clearly to be difficult for our campaign to make headway while the accounts of this secretive organisation remain closed to the public. To lift the lid, in other words, it may first be necessary to open the books.

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The post Jubilee Scotland and Jubilee Debt Campaign meet the ECGD appeared first on Jubilee Scotland.

Most of the ECGD debt cancellation that occurs is through the HIPC initiative.  HIPC only includes countries that qualify as having ‘unsustainable debt’ as calculated by the World Bank & IMF. So far only 23 countries qualify as having had unsustainable debt. This process is part of the big debt relief deal agreed in 1999 in the wake of the Jubilee2000 campaign.

The forum for ECGD debt cancellation is the Paris Club  an informal creditors club that meets to decide the fate of country’s debt problems. This forum includes all the export credit agencies owed debt by the country under consideration as well as other governmental representative. For the UK this includes someone from Dfid, FCO and the Treasury.

The debt cancelled at the Paris Club under HIPC owed to the ECGD is then counted as ODA by the UK government. This goes towards the government’s target of aid spending as a proportion of Gross National Income. By including debt relief as ODA the UK government (as well as many other EU governments) inflate the amount they spend on aid and by a huge amount. click here to see the UK aid chart and the proportion of this as debt relief

ECGD debt cancellation should not come from the aid budget! Not only is this a massaging of the aid figures and denying poor countries more aid but at the same time it subsidises UK exporters for their operations in the developing world- not for reducing poverty. Why should this come out of the aid budget? The biggest industry that the ECGD subsidises is the arms industry. For example the ECGD is owed over US$1billion by the Indonesian government for tanks and jets sold to Suharto in the 1990s.
Military debt cancellation is also not supposed to be counted as ODA even though about 45% of ECGD’s business concerns the arms industry. For more information on this see the Blog entry on NigeriaTherefore the UK government is moving towards its aid target at the expense of those that its aid is supposed to benefit. This is all despite constant calls from campaigns such as Jubilee Scotland but the OECD whose Development Assistance Committee (DAC) analyses ODA levels actually allows this practice to continue.

In 2005 there was international recognition that global aid spending needed to be increased by at least US$50 billion a year to meet anti-poverty targets(the Millennium Development Goals). THIS FIGURE DID NOT INCLUDE DEBT RELIEF.

However in the same year,the UK as well as other creditors implemented two of the biggest debt relief deals outside of HIPC. Debt cancellation for Iraq and Nigeria. Iraq’s situation was spurred by reconstruction efforts after the war and calls by the US administration for debt relief. In Nigeria the government threatened to default on their debt payments resulting in partial cancellation in return for a one-off payment. Most of the debt owed to the UK by both countries was through the ECGD.

This has meant that the UK and global aid figures are even more inflated than usual:

“ODA was exceptionally high in 2005 due to large Paris Club debt relief operations (notably for Iraq and Nigeria) which boosted ODA to its highest level ever at USD 107.1 billion. In 2006, net debt relief grants still represented a substantial share of net ODA, as members implemented further phases of the Paris Club agreements, providing USD 3.3 billion for Iraq and USD 9.4 billion for Nigeria. Excluding debt relief, ODA fell by 0.8%.”

http://www.oecd.org/dataoecd/7/20/39768315.pdf

|In the UK 24% of ODA was spent on Iraq and Nigerian debt cancellation in 2006 http://www.concordeurope.org/Files/media/internetdocumentsENG/Aid%20watch/1-Hold_the_Applause.FINAL.pdf

For more information here is a few links to reports on Export Credit Agencies and debt.

http://www.whiteband.org/resources/issues/debt/debt-cancellation/Export%20Credit%20DEBT(final).doc <http://www.whiteband.org/resources/issues/debt/debt-cancellation/Export%20Credit%20DEBT%28final%29.doc>

http://www.eurodad.org/

Other organisations that scrutinize Export Credit Agencies

ECA Watch www.eca-watch.org <http://www.eca-watch.org/>

EURODAD www.eurodad.org <http://www.eurodad.org/>

The cornerhouse www.thecornerhouse.org.uk <http://www.thecornerhouse.org.uk/>

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The post ECGD – The UK government’s debt generator appeared first on Jubilee Scotland.

Jubilee Debt Campaign, Jubilee Scotland and the Anti-Debt Coalition Indonesia are calling on the UK government to cancel £525 million of illegitimate debt owed by Indonesia from loans made to former President Suharto, who died on Sunday 27th January

Much of Indonesia’s debt to the UK was contracted in the 1980s and 1990s to buy British arms, including tanks, water cannon and aircraft. At least 75% of the £705 million Indonesia owes the UK – which is still being repaid – is known to relate to arms sales [1]. Suharto’s use of arms to suppress his own people, such as in East Timor, is notorious.

Ben Young, of Jubilee Scotland, said:

“Indonesia is still paying the UK millions in debt every year from arms loans made to Suharto. Rich countries including the UK knowingly lent this dictator billions of dollars, to fund arms sales including Hawk jets and Scorpion tanks. It’s time the Indonesian people stopped paying for their own oppression.”

Yuyun Harmono, of Koalisi Anti Utang (Anti Debt Coalition Indonesia), said:

“The Indonesian media are maintaining that Suharto had no faults; they need reminding that he was a dictator and has committed many crimes. Suharto took out many loans from the multilateral institutions, and from the UK, the US, Australia and Germany. These loans were not taken out by Indonesia, but by a dictator. We’re saying that the Indonesian people will not now pay the loans back.”

Sarah Williams, of Jubilee Debt Campaign, said:

“After the fall of Saddam Hussein there was clear international agreement that whatever the reasons for the original loans, the Iraqi people should not have to repay their dictator’s debts. Yet ten years after the fall of Suharto, the Indonesian people are doing exactly that, while more than half the population live below the poverty line.

“Suharto’s death is a chance for the UK and other rich countries to take the lead in cleaning up international lending – by cancelling Indonesia’s illegitimate debts.”

The following letter by Ben Young of Jubilee Scotland was published in the Glasgow Herald in response to the Herald’s obituary on Suharto:

Your obituary of General Suharto rightly emphasises the extraordinary brutality of his rule, but overstates the economic development over which he presided. Human development indicators such as life expectancy, child mortality and education improved steadily in the decades after the Second World War; Suharto’s rise to power is not marked by any acceleration in the rate of improvement. This suggests that development was actually initiated by President Sukarno and continued despite, not because of, his successor’s deeply corrupt rule.

Nor should we gloss over the predicament of most Indonesians today, half of whom live under the $2 per day poverty line. The country also has colossal debts, spending three times as much servicing them as it does on health and education combined. Suharto’s estate, meanwhile, contains up to $35bn stolen from the public purse. This is the legacy of the man who styled himself “father of development”.

Ben Young, National Co-ordinator, Jubilee Scotland, 41 George IV Bridge, Edinburgh.

 Also published was a letter by James Picardo of Jubilee Scotland in response to The Independent’s report on Suharto’s death 

The justice we owe the Indonesians

 It is true that the Indonesian people will never have the satisfaction of seeing the dictator Suharto brought to justice (report, 28 January). But there is still a hope for some measure of justice from the international players who were willing to fund his murderous regime – a roll of shame which includes the UK.

The £500m the UK government lent to Suharto was not only used for tanks and planes to shore up his vile reign, but is still being paid off by the Indonesian people, and hobbling their steps towards development and democracy. Civil society groups in Indonesia have long called for the cancellation of this odious debt. To listen to them now – and act on their wishes – would be to make some small amends for our past role.

James Picardo

Jubilee Scotland, Edinburgh

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The post Time to drop Suharto’s arms debt appeared first on Jubilee Scotland.

‘Odious debt’ is a concept which enjoys some international credibility, but not nearly enough! Put simply, it is based on the idea that, if a dictator takes out loans for violent, abusive or simply frivolous purposes, his people should not be required to pay back the debt after he has gone. Every victory of debt-cancellation on this basis – and there are many such campaigns all over the world – strengthens this important doctrine.

Why is there any need for this? What was wrong with campaigning for debt cancellation solely on the basis of a country’s poverty? Here are a couple of reasons to be going along with, although there are plenty more.

Firstly, the existing debt-cancellation mechanisms demand that a country be branded as a ‘Heavily Indebted Poor Country’ before it qualifies for debt relief. It is obvious why this is demeaning.

Secondly, if debt cancellation is enacted on the basis of bad lending, it turns the spotlight back on the lender, and perhaps makes them think twice about dealing with dictators in the future.

This is a global movement within which Jubilee Scotland plays a small part. Jubilee USA are campaigning, for example, on cancelling the debts extended to Haiti’s infamous Duvalier regime, the European anti-debt coalition EURODAD is working to get government’s to sign a declaration of responsible lending, while the Norwegian government has already cancelled its debts to Ecuador and other countries on the grounds of illegitimacy.

More to follow…

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The post January Campaign Update on Indonesia appeared first on Jubilee Scotland.

We’ve long complained that debt relief should not be counted as aid, on the grounds that debt cancellation is not new money going into a country, but old money not leaving the country. It’s a difference that can’t be captured just by looking at the accounting, though: one has to think about the history and ethics of the money. This makes the argument slightly shakey.

But recently we’ve been concerned about it for another reason. According to the international accounting rules for debt cancellation (set by the OECD), cancellation of military debts cannot be counted towards overseas aid targets. The UK has made some fairly significant steps towards reaching the 0.7% GNI target, going from about 0.36% GNI in 2003-04, to 0.51% in 2006-07. We been wondering, though, whether this level has been reached by counting the write-off of military debts towards the 0.7% target – that is, by breaking the OECD rules.

All of the debt cancelled for (or rather: bought back from) Nigeria was export credit debt, that is, old commercial debts that had been guaranteed by the UK and Nigerian governments. On average, around 40% of export credits are for arms. If this percentage held for Nigeria’s debts, then around 40% of Nigeria’s debts should not be counted towards the UK’s 0.7% aid target. This would mean that, potentially, the UK would have to reduce its ODA by £700 million (about 40% of £1.7 billion).

Given Nigeria’s history of military dictatorships, and the vast amounts of money that elites in that country have had for prestige projects, it surely would not be surprising if Nigeria had military debts to the UK.

We asked DFID whether they had gone through Nigeria’s debts before cancellation, and excluded the military debts, but they didn’t have the information. So Gavin Strang MP asked a Parliamentary Question on our behalf, which was answered very promptly, which was great, and the answer came back:

Arms Trade: Nigeria

Dr. Strang: To ask the Secretary of State for Business, Enterprise and Regulatory Reform what proportion of export credit outstanding at the end of financial year 2004-05 for Nigeria was for military goods. [180895]

Malcolm Wicks [holding answer 28 January 2008]: Information on ECGD business supported prior to 1991 is not held on a basis which enables defence to be identified separately from other sectors. ECGD has however supported no defence business on Nigeria since that date. (29 Jan 2008 : Column 202W)

The first part of the answer means that military debts cancellation may have been counted towards the 0.7% target, but that there is no record of what this is. The second part of the question, though, would be great news if true, since it would mean that the Abacha regime received no official military support from the UK. UK arms sales to Africa, however, according to the Observer:

UK arms sales to Nigeria [are] up tenfold since 2000 to £53m, including armoured vehicles and large calibre artillery. (June 12, 2005)

Now, Nigeria is surely a risky market (though markets warmed to it immediately after the debt cancellation); and the Export Credit Guarantee Department exists to support UK exports into risky markets. Furthermore, export credits were being provided well into the 90s for exports to Indonesia, so why baulk at Nigeria?

It therefore seems absolutely incredible that the Export Credit Guarantee Department has guaranteed no loans to Nigeria since 1991. Absolutely, mind-stunningly, incredible. Totally, discombobulatingly, extra-terrestrially incredible. However, there can be no doubt that the answer to the Parliamentary Question is entirely accurate.

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