The question they dared not answer

The Scott report reveals why the dangerous and immoral policy of selling arms to Iraq was kept a diplomatic secret, says Anthony Sampson

As MPs prepare for today's debate on the Scott report, it will be a tragedy if they become so preoccupied with the legal details that they forget the central moral question: how did a government set about providing weapons for a ruthless dictator, who was already a potential enemy, and then give him the funds with which to buy them?

The question of how or whether ministers lied to Parliament is really secondary and diversionary. Everyone in politics or business knows that lies are sometimes inevitable and that (as de Tocqueville said) diplomacy can never be compatible with democracy. The Labour Party does itself no good by pretending otherwise.

But the point of this story is that ministers and diplomats concealed the arming of Saddam Hussein from Parliament, and hence the public, because they knew they could not publicly defend it. It is the means by which they permitted this dotty and dangerous adventure which provides the central plot of Sir Richard Scott's whodunit.

Scott's real achievement is not in his ambiguous judgements but in his laying bare, with vivid detail and dialogue, the bureaucratic process by which absurd and immoral policies are implemented. It is this that will make his work indispensable to future historians and immortalise the names of Waldegrave, Lyell et al, whether they resign or not.

He reveals for the first time the realities of arms selling, the darkest area of all, and how easily it can obscure and override any serious consideration of national interest or common morality. He publishes the minutes of officials who were well aware of Saddam's evil yet who could still press for him to be supplied with more defence equipment. Colonel Aldridge, the defence attache in Iraq, wrote a report in 1988 which referred to Saddam's atrocities, including exterminating Kurds by chemical warfare, while urging more scope to sell him defence equipment and commending the Arab proverb: "The man who does not visit me in time of war will not be welcome in time of peace."

Scott exposes the elaborate humbug and self-deception by which British bureaucrats and diplomats approved exports of machine tools while pretending they were really for civilian use; and how they avoided the supposed constraints of export licences to allow potentially lethal manufacture.

For anyone such as myself who has tried to investigate the arms trade, Scott's evidence is both crucial and exasperating - for it makes a mockery of official explanations, particularly of the supposed controls which the Foreign Office has claimed to exercise. When Matrix-Churchill applied to sell tools for making ammunition and had to fill in "precise purpose" on the form, it simply wrote: "manufacturing of general engineering products" - which, as Scott says, is the antithesis of a "precise" purpose. Yet the licence was duly approved.

Whether or not the Foreign Office was approving deadly machines, it simply did not want to know. And it is this bureaucratic instinct not to want to know which recurs through the report, with all its associations with past war crimes.

It reaches a climax in the extraordinary tale of the planned export of the "supergun". When Mr Q, the intelligence officer, circulated through Whitehall the sensational news that Iraq was developing a deadly long- range supergun, produced by the British company Walter Somers, he found he had a credibility problem. When he asked for help from intelligence colleagues in Spain, they reported: "Once the laughter subsided ... we undertook inquiries ..." When a new boss of Walter Somers, David James, realised that his firm was making the "monstrous gun", he told another intelligence officer, who thought it so improbable that he refused to accept what James alleged and asked Mr Q: "Has the guy finally taken leave of his senses?"

But the most extraordinary part of the story is how the Government was so willing, not only to provide weapons, but to subsidise them through the Export Credit Guarantee Department (ECGD), which pays for them (at the taxpayers' expense) if the customer does not. Scott describes how, from 1985, the Ministry of Defence insistently pressed for more loans to finance military as well as civilian products to Iraq, and how the Foreign Office gave way - even though (as Scott says) it "was plainly inconsistent with a policy of evenhandedness" towards Iran.

The Ministry of Defence persuaded the Department of Trade and Industry and the Treasury that equipment for communications and artillery was really for civilian use and therefore entitled to credit beyond the "defence quota" for loans to Iraq. By 1987, after the atrocities against the Kurds were well known, we were not only supplying crucial equipment for the Iraqi police to communicate with the army, we were also providing loans for it - while Iraq was increasingly overdue with other repayments.

Scott rightly comments that Parliament had the right to be informed of how public money was being spent on arming Iraq. But Parliament was not told, of course, because the loans were absurd and highly dangerous. They suited the arms makers, the bankers and Saddam, but they could not suit a public interested in peace and in saving taxpayers' money.

The full cost of this spendthrift policy has been worked out in the important booklet Gunrunners' Gold, published by the World Development Movement last May, which describes how weapons to many developing countries were financed by British taxpayers. But Iraq spelt out the full folly of it. By 1989, Saddam was effectively broke; as Boyden Gray, one of President George Bush's advisers, put it: "God, this guy had money problems. No wonder he went marching into Kuwait." After the Gulf war, the ECGD was faced with up to pounds 952m of unpaid debts to Britain - many for military equipment.

The fact that we were, in effect, giving away defence equipment to our potential enemy of course makes nonsense of the arguments much-touted at the time by Alan Clark or the late Nicholas Ridley, that arms sales were essential to Britain's economic future - or to the assumption that they were crucial to making jobs at home. If the sales turn out to be gifts, there are much cheaper and more productive ways of making jobs than giving weaponry to future enemies.

How did we get locked into such a dangerous and costly mistake? Scott's report effectively shows how readily bureaucrats become entangled in irresponsible policies. But it also makes clearer why the ex-Foreign Secretary Lord Howe went to such lengths to rubbish Scott; for it reveals how the duplicity at the top infected all the diplomats and encouraged them to conceal the truth from themselves and from each other.

No wonder they were determined not to tell Parliament or the public. But if this is not a cover-up, then we have to ask the Government, what is?

The writer is author of 'The Arms Bazaar: From Krupp to Saddam'.