UK Government Not To Underwrite Third World Arms Loans London Press Association in English 1022 GMT 11 Jan 00 Tuesday, January 11, 2000 The Government will no longer underwrite loans to Third World countries in order to enable them to buy British arms, Chancellor Gordon Brown will announce tonight. He will say that in future export credit guarantees will no longer be extended to "unproductive" projects which will not help the development of the country concerned. It means that foreign dictators will no longer be able to take out loans underwritten by the Treasury to furnish themselves with luxury yachts and palaces. However the main impact of Mr Brown's announcement -- to be made in a speech tonight in Oxford organised by the charity Oxfam -- is likely to be on the lucrative arms market. The move follows Mr Brown's announcement last month that Britain would write off all bilateral debt to 41 of the world's poorest nations once they had internationally agreed poverty eradication programmes in place. But the new restrictions on export credit guarantees will extend beyond the states covered by the highly indebted poor countries (HIPC) initiative to a total of 62 nations. The Government had already imposed a temporary two-year ban on export credit guarantees for unproductive expenditure on the HIPC countries - however, the new restrictions announced today will run indefinitely. Among new countries affected will be Gambia and Lesotho as well as Cambodia and Eritrea which are both already subject to international arms embargoes. The new list does not cover Indonesia which has been one of the most controversial purchasers of military equipment. Nevertheless, Mr Brown's announcement was welcomed by campaigners against the Third World arms trade. Dave Holland of the foreign affairs think tank Safer World urged the Government to start pressing now for an international ban on governments underwriting loans for arms deals. "We very much welcome this extension of the number of countries for whom taxpayers' money will not subsidise arms exports and hope the Government will take the lead internationally to phase out this practice," he said. The Campaign Against Arms Trade also welcomed the move but said that until the full list of countries covered was published, they would not know whether the announcement was "really meaningful". "However genuine this move, it is a small step. Arms exports to oppressive regimes and regions of tension will still be supported," said CAAT's Robin Oakley. "Over 50% of ECG coverage last year supported arms sales. Unless these new restrictions include the major customers to the UK arms industry, the Government will still be exposing a disproportionately large amount of the taxpayer's money supporting the arms industry when its economic value to this country is low relative to civil exports." Maj Gen Alan Sharman, director general of the Defence Manufacturers' Association, said the small volume of armaments purchased by the countries on the list meant that Mr Brown's announcement was "pretty insignificant". He was asked whether he was concerned that, even so, the Government appeared to be signalling a determination to make it more difficult for his association's members to get export credit support. He told BBC Radio 4's The World at One: "I hope not, because the vast majority of what is involved is exporting to countries about which there is no controversy ... I don't believe that the Government has any general intention to jeopardise what could be commercial exports by upsetting other countries' governments." Shadow International Development Secretary Gary Streeter described the Government's move as "an empty gesture and bad policy". "It won't make much of a difference. Very few of these countries buy weapons from us anyway. It's bad policy ... because although we all want to see these smaller emerging nations focus on health care and education, they also have the right to defend themselves. "And if they can't buy their arms from us, all we are simply doing is driving them into the arms of the French or the Americans ... If we don't sell them weapons, I'm afraid that others will. "What we should do is deal with this on a case by case basis, as we always have done. Of course there are some countries it is undesirable to sell weapons to, that will remain the case in the future. "We don't want grand gestures on this kind of issue, we want to decide on a case by case basis who are responsible purchasers of weapons and who are not."