How British loans funded dictators arms spree

Britain backed loans for millions of pounds to some of the world’s most notorious dictators to spend on arms. Britain financed exports to military regimes in Egypt, Indonesia, Burma, Sudan, Iraq, Ecuador, North Korea and even guaranteed loans for the Argentina junta to buy British weapons in the run up to the Falklands War, figures released by the British government show.

The democratically-elected government of Indonesia owes Britain £304m for loans to finance arms sales to the repressive regime of General Suharto (1969-1998), who was responsible for murdering 500,000 of his own citizens. The UK government guaranteed sales of British-made Scorpion tanks and Hawk jets which were used to repress the population of East Timor, which Indonesia invaded in 1975, killing 200,000 Timorese.

The Egyptian government, which came to power after the Arab spring, owes £95m of which at least 23 per cent comprises arms sales to the dictatorships of Hosni Mubarak (1981-2011) and General Anwar Sadat (1970-81). Ministers say the loans were used to pay for communications equipment for the Egyptian military.

Campaigners in Egypt want the debt audited and loans for arms sales written off. The Popular Campaign to Drop Egyptian Debt said in a statement: ‘Although Egyptians did not have a say over the need for external borrowing nor the priorities over which the loans will be spent for, they continue to suffer from Mubarak’s debt burden even after his fall.’

Late last year, the government released for the first time figures showing what was owed to UK Export Finance (formerly known as the Export Credit Guarantee Department). The body guarantees loans for British exports and acquires the debt if it is not paid. The data showed that at least 20% of the £1.8bn owed to UK Export Finance was used to fund arms sales, but details of individual contracts have not been released. The Liberal Democrats used to demand a full audit of Britain’s debt while in opposition, but Vince Cable, now the minister responsible for UK Export Finance, has refused to divulge further details of the loans.

Tim Jones, policy officer at Jubilee Debt Campaign, said: "The UK government has a horrendous record of backing loans for damaging or useless British exports. The Liberal Democrats have a policy to audit the resulting debts, and cancel those from unjust loans to dictators. But Vince Cable has refused to do so since he has been in charge of the department responsible."