Clegg under fire over Egypt's £100 million debt to the UK

By staff writers
October 25, 2011

Deputy Prime Minister Nick Clegg has been accused of ignoring skeletons in the UK government’s cupboard after pledging £5 million of British money to help the Egyptian economy. An NGO quickly pointed out that Clegg had failed to mention Egypt’s £100 million debt to the UK.

The debt has been inherited by Egypt from Mubarak. It is owed to the Export Credits Guarantee Department (ECGD), a unit of Vince Cable’s Department for Business.

The ECGD claim that they no longer have information about what the loans were given for. Ministers’ refusal to audit the debt has led to suspicion that they are afraid of uncovering irresponsible lending practices on the part of the ECGD.

The Jubilee Debt Campaign have called for a thorough reform of the ECGD, which has been nicknamed “the Department for Dodgy Deals”, due to its lack of transparency and support for arms, aviation and fossil fuel companies.

Christian Aid, the Speak network, the Campaign Against Arms Trade (CAAT) and Amnesty International have all backed the call for change at the ECGD.

Christians, anti-poverty groups and concerned individuals from across Britain are preparing to lobby their MPs and stage a demonstration on 31 October. They will call on the government to audit Egypt’s debts and to cancel those which fuelled injustice rather than benefiting the people.

The Jubilee Debt Campaign urged Nick Clegg and Vince Cable to live up to “their fine words about democracy in Egypt by putting the country’s debts under the spotlight”.

“This would show their support for Egyptians seeking to move on from the corruption of the Mubarak years,” said the Campaign’s Maddy Evans.

She added, “It is incredible that the ECGD say that they do not know how Egypt came to owe them £100m. It’s like receiving a letter from a bank demanding repayment for a loan but refusing to say how or when it was made.”

The ECGD backs loans to countries and companies to buy British exports. Traditionally, 75 per cent of ECGD support has been given to arms, aerospace and carbon-intensive industries.

In the event of an ECGD-backed loan not being repaid, the ECGD repays the loan instead. The ECGD may then try to recover the total sum paid from the government of the recipient country – in effect it will become debt which that government owes to the UK government.

In this way, countries in the global South have accumulated significant quantities of debt owed to the UK government.

Maddy Evans said, “An audit of dictator debts would open up the ECGD to scrutiny, allowing the public to see how their money was being used”.


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