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Arms
Trade
Did You Know?
ECAs play an important role in arms exports because of their close association with governments. Many ECAs play a major role in the financing and export of weapons to developing countries. The arms trade does not promote development, occurs in a climate of secrecy conducive to corruption, has devastating impacts on security and human rights, and is aggressively and disproportionately promoted by some governments (and so their ECAs) as a part of defence and foreign policy. As a crucial part of these policies, the arms trade is heavily subsidized by governments from the early stages of research, to guaranteed procurement, to export. Often, without a government loan guarantee there would be no finance, and so no arms sale. ECA Watch member groups work toward the prohibition of export credit support for arms and other military transactions.
" ...we conclude that without more legal or political backbone, end-use assurances are not worth the paper they are written on. "
-the UK Defence, Foreign Affairs, International Development and Trade and Industry Committees on Strategic Export Controls - Annual Report for 2002, Licensing Policy and Parliamentary Scrutiny-- End-use assurances: Indonesia (18 May 2004) |
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Important Background Documents on the Arms Trade
Paper on Export Credit Agencies and Arms Trade - 2001 by European Network Against Arms Trade (ENAAT) in Bremen; a report written in preparation for the Third NGOs' Stategy Session on ECA Reform, Indonesia May 2-7, 2000. In this report is one particlarly disturbing example of ECA support for the arms trade:
the Indonesian pulp and paper mill Indorayon Utama (now
PT Toba Pulp Lestari) was polluting the Asahan river, and when protesters set up a blockade, they were confronted with 1000 members of the armed forces: both the mill and the armed forces defending it were operating with ECA support.
The UK Government and Arms Trade Corruption: A Short History [PDF] - June 2005 by Nicholas Gilby for Campaign Against Arms Trade (CAAT): a briefing paper about the UK's arm industry and the role of ECAs.
The Case for Removing Arms from the ECGD's Portfolio - May 23, 2002 by Ann Feltham of CAAT and Michael Bartlett of the Religious Society of Friends; prepared for the UK Seminar on Export Credit Reform in the House of Commons. It reports: "Arms sales take up a disproportionate amount of [the UK ECA ECGD's] export credits. Military exports account for around 2% of UK visible exports, yet, over the last five years, military exports have absorbed 30% of ECGD support." ECAs go where commercial banks fear (for their reputations) to tread. The ECAs of France, Germany, the Netherlands, the UK, and the US all aggressively fund the export of arms, even when that sector is a very small part of the country's exports. The UK and the Netherlands are the most disproportionate in their export credit support for the arms trade: in the period August 2002-December 2004 military and arms-related export credits represented 30% of the value of all transactions by the Dutch ECA Atradius, while military transactions were only 0.2% of all Dutch exports.
Worse Than the World Bank? Export Credit Agencies-The Secret Engine of Globalization [PDF] - Winter, 2003 by the Aaron Goldzimer; a report for Food First, includes section on ECA funding of arms and nuclear weapons.
The G-7 Statement on
Non-Productive Use of Export Credits by Low-Income Countries (see Paragraph 24) - 21-23 July 2000 The G-7 decided at the Okinawa sessions in 2000 to pressure the members of the Organisation for Economic Co-operation and Development (OECD) to stop Low-Income Countries (LICs) from using export credits for arms purchases. There is widespread consensus that the arms trade does not in any way contribute to socially responsible, sustainable development. Arms purchases are the ultimate non-productive expenditure for a developing state. Development institutions such as the World Bank refuse to fund the export of arms.
The Link Between the Arms Trade and Corruption
Some ECAs directly support corrupt practices in the export of arms. For example, La Monde reported in 1998 that the French ECA COFACE funded approximately USD $2B in bribes in the armaments industry over the previous three years. Often disguised as "commissions," bribes may amount to as much as 100% of the arms contract value itself.
News 2004-2005
 UK Channel Four News Investigates British ECA Practices - June 8, 2005 (Source: London Green Party) — The Channel Four News in the UK reports that the ECGD has helped Britain to become the world's second biggest arms exporter.
UK’s ECGD Insures Saudi Military - December 14, 2004 (Guardian, UK) - The UK government, via its ECA the ECGD, has secretly agreed to pay the arms firm BAE Systems £1B in the event that the Saudi regime collapses.
ECGD Funded Suharto Tanks, Belying UK's Claimed Ethical Foreign Policy - December 7, 2004 (The Guardian, UK)
Victory in Belgium [Word Document] - February 2004 The Belgian NGO Proyecto Gato and the UK NGO Rights and Accountability in Development won an impressive victory by blocking the Belgian Government's license for a proposed export of ammunition-fabricating machinery to Mwanza, Tanzania, on the boder of the war-torn Congo. The deal was to be backed by the Belgian ECA Delcredere, and came to light when it was leaked to the press in December 2003. See the Wallon-Minister President Van Cauwenberghe's press release about the denied license.
For more information, contact the ECA Watch Facilitator.
ECA Watch Campaign Member Links:
Campaign Against Arms Trade (CAAT) — www.caat.org.uk
Proyecto Gato — www.proyectogato.be
The Corner House — www.thecornerhouse.org.uk
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